The entrepreneurial spirit is alive and well in the United States. According to the Small Business Administration, more than 572,900 new businesses opened in 2003. Unfortunately, and estimated 554,800 closed that same year, and an additional 35,037 declared bankruptcy. Two-thirds of small businesses survive for two or more years, and about half make it for more than four years.

According to a survey of small business owners, the major factors for business success were an ample supply of capital, the fact that a firm is large enough to have employees, the owner’s education level, and the owner’s reason for starting the firm in the first place, such as freedom for family life or wanting to be one’s own boss.

Small business (those with 500 employees or less) account for around 50 percent of the employment opportunities in the U.S (57.4 million jobs), and firms with 100 employees or less employed 41 million people. During the 2000-2001 fiscal year––the last year statistics were measured––more than 1 million new jobs were created by small businesses.

How important are small businesses to the economy? According to the U.S. Bureau of the Census, small firms (that is, independent companies with less than 500 employees):

• Represent 99.7 percent of all employers.

• Employ half of all private sector employees.

• Pay 44.3 percent of total U.S. private payroll.

• Generated 60 to 80 percent of net new jobs annually over the last
decade.

• Create more than 50 percent of non-farm private gross domestic product (GDP).

• Supplied over 23 percent of the total value of federal prime contracts in FY 2003.

• Produce 13 to 14 times more patents per employee than large patenting firms. These patents are twice as likely as large firm patents to be among the one percent most cited.

• Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers).

• Are 53 percent home-based and 3 percent franchises.

• Made up 97 percent of all identified exporters and produced 29 percent of the known export value in fiscal year 2001.
 

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