Small business growth, struggles documented

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The small business sector chugged its way through a difficult recessionary cycle – at least based on a September 2009 SBA Office of Advocacy report.

During 2008, there were 29.6 million businesses in the United States, according to Office of Advocacy estimates.

U.S. Census Bureau data showed that there were 6 million firms with employees through 2006 and 21.7 million without employees during 2007 (the latest available data).

Companies with fewer than 500 employees represented 99.9 percent of the 29.6 million businesses, including both employers and non-employing companies. The most recent data showed there were only about 18,000 large businesses through 2006.

The agency’s researchers discovered some significant business survival trends — particularly an upward spike in foreclosures — as it surveyed the number of companies with employees that have survived through December 31, 2008.
Seven out of 10 new firms with employees lasted at least two years, and about half survived five years.

Census Bureau data also indicated that 69 percent of new companies with employees that began business during 2000 survived at least two years, and 51 percent survived five or more years. Those survival rates were on par with firms “born” earlier — during 1990 — data showed. With most establishments starting small, 99.8 percent of the new employing groups were started by existing small firms – think franchises, new store/office locations or subsidiaries. Survival rates were similar across states and major industries.
Source: U.S Dept. of Commerce, Bureau of the Census, Business Dynamics Statistics. Note that the figures could be skewed slightly by the rare occurrence of new firms opening multiple establishments in their first few years.