A statistical and informational snapshot of the business world today

The Big Picture

How many businesses are there?

  • The population is growing.
  • The gross domestic product continues to expand.
  • The number of business enterprises outpaces the number of business closings.

Sources: Office of Advocacy, U.S. Small Business Administration; Bureau of the Census, Bureau of Economic Analysis.

Population, Production, and Businesses with Employees, 1991 and 1995
Year Total
Gross domestic
product (in current $)
Total number
of businesses
1991 252,138,000 $5,917 billion 5,687,000
1995 262,755,000 $7,254 billion 6,220,000

Source: Office of Advocacy, U.S. Small Business Administration.

The Population of Business Enterprises, 1992-1996
Year New
total businesses
1992 737,000 138,000 819,000 5,741,000
1993 776,000 136,000 801,000 5,851,000
1994 807,000 137,000 803,000 5,992,000
1995 812,000 162,000 869,000 6,057,000
1996 820,000 171,000 823,000 6,220,000

Businesses include all active unemployment-insurance taxpayers, including virtually all nonfarm employers, except households, railroads, and selected religious organizations.

The Mood

How confident are business owners?

  • A big majority--68%--of small-business owners expect to grow in 1997.
  • Although they are not having trouble getting the financing they need, they see no reason to increase their debt.
  • Most--61%--small-business owners have no plans to enlarge their workforce this year.
  • Nearly 70% expect to expand their customer lists, increase revenues, and enhance profits.

The Greatest Challenges Facing Small Business in 1991

  • Avoiding a cash-flow squeeze
  • Keeping costs under control
  • Coping with the continuing recession
  • Finding qualified employees
  • Paying for health insurance

The Greatest Challenges Facing Small Business in 1996

  • Finding qualified employees
  • Handling increasing insurance costs
  • Coping with regulations and high taxes
  • Dealing with increasing domestic competition
  • Evolving with the changing business climate

Source: Annual Survey of Small Businesses, Dun & Bradstreet Corp., Murray Hill, N.J., 1991, 1997.

The Internet

Does fact match hype?

  • Only 5% of small companies regard the Internet as key to business, but in the past two years alone, the percentage of companies using on-line services has nearly doubled, approaching 40%.
  • By 2000, the World Wide Web may be a significant distribution channel: $95 billion in sales.
  • Companies are making money on the Web: 36% of on-line newspaper publishers report that their Web-based business is or will soon be profitable.

How Many Sites?
Number of World Wide Web sites responding to Web Server survey

 199518,9571997739,706Source: Netcraft Web Server Survey 

The first World Wide Web site was launched in 1993.

Users and Buyers
Estimated number of World Wide Web users and the percentage of those who buy products or services on the Web

 199516 million users29% buyers199634 million users26% buyers2000163 million users45% buyersSource: International Data Corp. 

Total On-Line Commerce
Commerce on the Web

 1995$318 million2000$95 billionSource: International Data Corp. 

Newspapers On-Line

Number of North American dailies on the Internet in 1997: more than 500
Number of newspapers charging subscriptions for all user access in 1997: 2
Percentage of on-line publishers who report profits for 1996 or 1997: 36%
Source: Newspaper Association of America.

Advertising On-Line

 Total online advertising revenue1997$400 million-$750 million2000$3.1 billion-$4.8 billionSource: Internet Advertising, Forrester Research, Cambridge, Mass, 1996; Credit Suisse First Boston. 

How many companies do it?

  • 65% of companies with revenues of less than half a million dollars say they do not outsource.
  • But of a group of companies characterized as the fastest growing in the United States, 83% do outsource.

U.S. Market for Outsourcing Services

 1996$100 billion1998$165 billion2001$318 billionSource: Outsourcing Institute, 1996 

Small businesses may not be outsourcing yet, but they will be before long.

Top Five Reasons Companies Outsource

  • To reduce and control operating costs
  • To improve company focus
  • To obtain resources they lack
  • To free their own resources for other tasks
  • To gain access to "world class" capabilities

Source: Outsourcing Institute, 1996.

Fast-growth companies, like companies overall, cited cost savings as the primary reason they began outsourcing: 63% perceived outside providers as more efficient or better able to achieve economies; 43% expected a reduction of overhead or debt; and 33% sought savings on the costs of benefits and administration.


How risky is it to own a business?

  • Most business deaths are not failures. They are "voluntary dissolutions," according to Bruce Kirchhoff, of the New Jersey Institute of Technology.
  • From the results of an eight-year study of 812,000 small, young companies, Kirchhoff discovered that well over half the businesses survived at least that eight-year period. Only 18% of them closed because of financial difficulties with creditors.
  • Of those businesses that disappear, only 20% to 25% end up owing money to their creditors.

Source: Office of Advocacy, U.S. Small Business Administration; Economic Analysis Department, Dun & Bradstreet.

Failures and Financial Liability, 1991-1996
Year Business
Total number
of failures
Average liability
per failure
1992 819,000 97,069 $971,653
1993 801,000 86,133 $554,438
1994 803,000 71,520 $410,477
1995 869,000 71,128 $524,175
1996 823,000 71,811 $473,759

Last year's average liability per failure was about half the size of the hefty debts creditors shouldered in 1992.

Business Failures by Age, 1996

 1-5 years42%6-10 years25%10+ years33%Source: Office of Advocacy, U.S. Small BusinessAdministration; Economic Analysis Dept, Dun & Bradstreet. 
Labor Force and Wages

How fast is pay rising?

  • Unemployment was down last year.
  • Earnings of both men and women are rising, but women aren't catching up with men.
  • Variable pay is rising as a percentage of total compensation.

Source: Bureau of Labor Statistics.

Employment and Unemployment, 1991-1996
Year Number of
civilian workers
(in thousands)
Number of
(in thousands)
Unemployment rate
(% of labor force)
1991 126,346 8,628 6.8%
1992 128,105 9,613 7.6%
1993 129,200 8,940 6.9%
1994 131,056 7,996 6.1%
1995 132,304 7,404 6.6%
1996 133,943 7,236 5.4%

Unemployment rates and totals have been falling since 1992, even as the working population continues to grow.

Source: Bureau of Labor Statistics.

Median Annual Earnings (in current $)
1991 1992 1993 1994 1995
Men $25,844 $26,260 $26,728 $27,144 $27,976
Women $19,136 $19,812 $20,540 $20,748 $21,112

Women's earnings continue to lag behind men's . . .

1996 Earnings for College Graduates with Advanced Degrees: The Top 10%

 Men$99,944 or higherWomen$76,544 or higherSource: Bureau of Labor Statistics 

. . . no matter how long they stay in school.

Sources: Hewitt Associates; Bureau of Labor Statistics.
Annual Salary Increases, Variable Compensation, and the Consumer Price Index (CPI), 1991-1996
Year Annual salary
increases for salaried,
exempt employees
Variable compensation
as a percentage
of payroll
CPI Dec.-Dec.
1991 5.0% 3.8% 3.1%
1992 4.6% 5.7% 2.9%
1993 4.3% 5.9% 2.7%
1994 4.0% 6.4% 2.7%
1995 4.0% 7.6% 2.5%
1996 3.9% 7.5% 3.3%

The future is never assured: sales rise and fall, the economy takes surprising turns, and employees' performance may or may not be consistently reliable. To protect their bottom line and to account for the vagaries of time and tide, many employers have established a variable compensation component (one-time bonuses, performance awards, and so on).

Home-Based Business

How many home-based businesses are there? What kinds?

  • No one knows with certainty how many people are running businesses from their homes. Estimates range from 5.6 million to 30.7 million. The most reasonable estimates are closer to 15 million.
  • Almost half of last year's new enterprises took form in their owners' homes.
  • No one knows how long home-based start-ups stay home-based.

How Many Home-Based Workers?

 199112 million199616 millionSource: Find/SVP. 

Estimates of the number of self-employed home-based workers continue to rise.

Source: County Data Corp.
Home-based start-ups, 1996
Men 350,308 903,563 39%
Women 236,473 433,069 55%
Total 586,781 1,336,632 44%
Source: County Data Corp.
Top Start-at-Home Businesses
Type of business Number of start-ups
Construction 19,149
Cleaning services (residential, commercial) 14,238
Retail Store 13,707
Consultant 11,078
Designer 9,279
Computer services and repair 7,899
Real estate 7,749
Painter 6,600
Lawn maintenance 6,320
Arts and crafts 6,139
Landscape contractor 6,136
Automotive services and repair 5,173
Building contractor (remodeling, repairing) 5,167
Management and business consulting 5,117
Marketing programs and services 5,090
Trucking 5,043
Wholesale trade, nondurable goods 4,956
Communications consultant 4,949
Restaurant 4,801
Audiovisual production services 4,792
Job Creation

Who's creating jobs, and who isn't?

  • Small companies in every sector of the U.S. economy are growing. Big ones aren't.
  • The larger the company, the more employment growth slowed.
  • The home health-care industry grew the fastest.

Employment by Sector, 1995

 Percentage oftotal employmentManufacturing20%Trade26%Finance, insurance, real estate8%Services32%Other14% 

Job Growth by Sector, 1991-1996

 All companiesManufacturing0.4%Trade2.2%Finance, insurance, real estate -0.3%Services3.4%Other0.8% 

Companies with 1-99 employees in 1991

 Manufacturing9.9%Trade3.9%Finance, insurance, real estate3.0%Services7.2%Other4.4% 

Companies with 100 or more employees in 1991

 Manufacturing -2.4%Trade0.2%Finance, insurance, real estate -2.2%Services0.8%Other -3.2% 

Employment by Company Size, 1995

 Number ofPercentage ofemployees in 1991total employment1-1930 -9917%100 or more53% 

Job Growth by Company Size, 1991-1995

 Number of Changeemployees in 1991 by 19951-199 -991%100-4,9990%5,000+ -2% 

New jobs were in the small, smaller, and smallest companies.

Employment by Company Age, 1995

 YearsPercentage oftotal employment*0-46%5-1423%15-2924%30+46%*Because of rounding, numbers do not add up to 100% 

Job Growth by Company Age, 1991-1995

 Company ageChange by 1995in 19910-4 years13%5-146%15-291%30+ -1% 

Sources: Who's Creating Jobs? and Corporate Almanac, Cognetics Inc., Cambridge, Mass., 1996

Source: Bureau of Labor Statistics.
The Top Job-Creating Industries, 1991-1996
Industry Number of
jobs gained
(in thousands)
Rate of
Personnel supply services 1,149 77%
Eating and drinking places 1,008 15%
Computer and data-processing services 402 50%
Misc. amusement and recreation services 360 47%
Department stores 328 16%
Home health-care services 313 91%
Miscellaneous business services 296 24%
Management and public relations 288 47%
Offices and clinics of MDs 267 19%
Nursing and personal-care facilities 249 17

The home health-care industry nearly doubled, growing from 344,500 to 657,500. Its 91% growth rate ranks it in first place, above the 77% growth rate of the personnel-supply-services industry.

Source: Bureau of Labor Statistics.
The Biggest Job-Losing Industries, 1991-1996
Industry Number of
jobs lost
(in thousands)
Rate of
Aircraft and parts 215 -32%
Savings institutions 119 -31%
Search and navigation equipment 103 -46%
Guided missiles, space vehicles, and parts 74 -44%
Womens' and misses' outerwear 72 -22%
Electric services 62 -14%
Women's clothing stores 58 -15%
Commercial banks 58 -4%
Computer and office equipment 57 -14%
Crude petroleum and natural gas 52 -27%

The rubber and plastic footwear industry is a mere shadow of its 1991 self. In only six years, employment declined 49%, to a scant 5,600.


Where are the hot spots?

  • The country's most entrepreneurial urbanites live west of the Mississippi River.
  • Men are more than twice as entrepreneurial as women.
  • Most new businesses are unincorporated sole proprietorships. New incorporations account for less than half of new business formations.

Formations and Incorporations, 1996

Number of new business formations (start-ups): 1,336,632
Number of new incorporations: 820,000
Sources: Office of Advocacy, U.S. Small Business Administration; County Data Corp.

New incorporations include many tax-sheltering entities, which are not considered new business formations. Most new formations are unincorporated sole proprietorships.

Source: County Data Corp.
The 10 Hotbeds of Entrepreneurial Activity, 1996
statistical area (MSA)
Number of
Start-ups per
100 people
Population rank
in 200 MSAs
Anchorage, AK 4,876 2.15 177
Boulder-Longmont, CO 4,312 1.91 179
Austin-San Marcos, TX 13,705 1.62 64
Houston 53,249 1.60 7
Denver 25,651 1.58 26
Colorado Springs, CO 6,147 1.55 115
Las Vegas 12,756 1.50 63
Dallas 39,944 1.49 10
Boise City, ID 4,350 1.47 147
Provo-Orem, UT 3,619 1.37 162

The 10 most entrepreneurial metropolitan areas are all west of the Mississippi River.

*Also included in the women's top 20 start-ups.
Source: County Data Corp.
Most Popular Start-ups, Overall and by Women, 1996
Type of business Number of
Started by women*
Construction 24,787
Restaurant 22,781 23%
Retail Store 21,081 35%
Cleaning services (residential, commerical) 19,642 45%
Real estate 17,549 20%
Automotive services and repair 16,158
Consultant 13,835 26%
Beauty salon 11,762 66%
Computer services and repair 11,111
Designer 10,676 51%
Management and business consulting 9,665 23%
Arts and crafts 9,412 74%
Painter 9,156
Lawn maintenance 8,498
Marketing programs and services 8,314
Landscape contractor 8,268
Investment broker 8,206
General contractor 8,137
Communications consultant 8,022
Building contractor (remodeling, repairing) 7,998

Only 9 of the 20 industries most attractive to female entrepreneurs made the top 20 of all new businesses.

New Business Formations by Gender, 1996

 Number of formationsPercentage of totalMen903,56368%Women433,06932%Source: County Data Corp. 

Men started more than twice as many businesses as women did.

Source: County Data Corp.
Women's Favorite Start-ups, 1996
Type of business Number of
start-ups by
Number of
start-ups by
all entrepreneurs
started by women
Secretarial services 2,409 2,823 85%
Child guidance 2,496 3,047 82%
Arts and crafts 6,948 9,412 74%
Beauty salon 7,821 11,762 66%
Florist, retail 3,213 5,058 63%
Gift shop 4,576 7,636 60%
Manicuring 2,483 4,437 56%
Antiques dealer 2,825 5,368 53%

This sampling of the most popular businesses started by last year's female entrepreneurs seens to support simple stereotypes.

Source: County Data Corp.
San Jose's Most Popular Start-ups, 1996
Type of business Number of start-ups
Restaurant 129
Automotive services and repair 103
Designer 93
Computer services and repair 63
Cleaning services (residential, commerical) 60
Computer systems design, consultants 58
Beauty salon 56
Consultant 55
Computer software 54
Automobile body repair and paint 49

The software and hardware-related industries of California's Silicon Valley attract considerably more venture capital than any other region of the country. Does that venture money inspire a broader range of entrepreneurial energy? Last year, nearly 5,500 new enterprises--0.69 businesses per 100 people--opened their doors in San Jose alone.


Who's funding today's emerging businesses?

  • More capital is invested by angel investors than by venture capitalists.
  • For the past three years, small-cap stocks have been outperformed by large-cap stocks.
  • Most businesses never use angel or venture funds, and they never go public. They go to the bank.

Annual Venture Investments

 1991$3 billion1992$4 billion1993$5 billion1994$5 billion1995$7 billion1996$more than $10 billionSource: National Venture Capital Association 

The Market for Initial Public Offerings

 Number of IPOs19913951996564 Dollars raised1991$25 billion1996$24 billion Average offering price/share1991$11.431996$11.81 Health-related IPOs199128%199617% Issues whose stock priceswere cut in half by year-end19919 (2%)199649 (9%)Sources: "The Year in IPOs," Inc., May 1992;Securities Data Corp. 

Last year saw far more new issues than 1991, but a considerably higher percentage of the 1996 IPOs recorded disappointing results during their early days of public trading.

Stock-Market Performance

Small-Cap Performance
(average market capitalization: $421 million)

 Year-end price/ Investors' earnings ratio annual return199123.943.4%199224.516.5%199324.217.3%199419.4-3.3%199522.726.5%199624.514.8% 

Large-Cap Performance
(average market capitalization: $6.1 billion)

 Year-end price/ Investors' earnings ratio annual return199120.228.8%199221.3 5.9%199319.6 7.2%199416.0-2.4%199517.434.4%199620.719.9%Source: Frank Russell Co. 

From 1991 through 1993, small-cap stocks performed and delivered healthier returns than the largest companies' stocks. Then the tables turned. Is that a trend?

Banks and Lending

 Commercial loans$ in billionsoutstandingAs of December 31, 1991$459As of December 31, 1995$538As of December 31, 1996$565 

Small-Business Loans Outstanding
(loans of less than $1 million)

 $ in billionsNumber of loansAs of June 30, 1994$1384,322,000As of June 30, 1995$1514,769,000As of June 30, 1996$1635,257,000Source: Office of Financial Assistance,U.S. Small Business Administration. 
Source: Office of Financial Assistance, U.S. Small Business Administration.
Small Business Administration Loans, Guarantees, and Liquidation Assets ($ in millions)
Total Current amount
Percentage outstanding
As of September 30, 1991 $15,653 $13,121 84%
As of September 30, 1992 $17,398 $14,872 85%
As of September 30, 1993 $19,746 $17,250 87%
As of September 30, 1994 $22,523 $20,037 89%
As of September 30, 1995 $26,141 $23,543 90%
As of September 30, 1996 $28,330 $25,709 91%

Thanks to tighter lending criteria, SBA borrowers are getting better about staying up-to-date with their debt payments.


What new practices are being adopted?

  • "Alternative" arrangements account for about 15% of the U.S. workforce.
  • Job sharing is on the rise.

People who have jobs in a corporate setting and work from home at least two to three days a month

 19915.5 million19968.7 millionSources: Find/SVP; Joanne H. Pratt, "Myths and Realities of Working at Home: Characteristics of Homebased Business Owners and Telecommuters," Small Business Research Summary, U.S. Small Business Administration, Washington, D.C., 1993 

Statistics show that telecommuters get more and faster promotions than their counterparts who report to the offi