Small Business 2001

In the United States there are an estimated 5.8 million small companies with 500 or fewer employees. (There were 5.5 million in 1997, the last year for which full data are available.) Which industries are small companies in?

It turns that out the Census Bureau examines that question with a pretty high-powered microscope. The lens of the microscope: Standard Industrial Classification (SIC) codes, a system the government developed to categorize every company's primary line of business. SIC codes are detailed. A listing of all companies by SIC codes reveals, for example, how many businesses are engaged in hunting, trapping, and game propagation (295, and all but one employs fewer than 500 people); coin-operated amusement devices (4,513, and all but 28 are small companies); and hundreds of other subindustries and sub-subindustries.

First train the microscope on the aggregate numbers -- in other words, on broad industrial sectors. (See "All Small Companies, by Industry," at right.) Nothing too surprising there. More than one million small companies are in retail trade. And more than 2 million are in that catchall category the government calls "services."

But ratchet up the magnification, and you start to see some interesting phenomena, such as the many, many different kinds of companies that make up the service sector. (See "Top Five Service Industries," below.)

All small companies, by industry
Number of businesses with 500 or fewer employees in 1997 (rounded)

Services (40.0%)

Retail trade (20.0%)

Construction (12.0%)

Finance, insurance,
and real estate

Wholesale trade (7.4%)

Manufacturing (6.0%)

Transportation, communications,
and public utilities

Agricultural services (2.0%)

Mining (0.4%)

Source: SBA's Office of Advocacy, based on data provided by the U.S. Cencus Bureau, Statistics of U.S. Business. Percentages do not add to 100% because of rounding.

Top five service industries
The biggest single SIC category for small companies is services, which comprises about 40% of all small businesses. It's a catchall category that includes some 2.2 million businesses, but it still doesn't include everything we usually think of as the service sector of the economy. Transportation, communication, and public utilities get their own category, for instance; so do wholesale trade and retail trade, and finance, insurance, and real estate. What's left for the service category? Here are the top five from the dozen or so subcategories:

Health services
(Doctors' offices, nursing facilities, etc.)

Business services
(Advertising, programming, personnel, etc.)

Engineering, accounting, research,
management, and related services


Membership organizations
(Associations, unions, etc.)

Personal services
(Cleaning establishments, hair salons, etc.)

Other services

Each of those subcategories, in turn, includes many subcategories of its own, usually designated "four-digit SIC codes." Here are the five categories with the largest number of small companies in the business-services sector:

Building cleaning and
maintenance services


Computer programming services

Computer services
(Other than programming)

Commercial art and
graphic design


Help-supply services
(Staffing and personnel)

Other business services

Source: SBA's Office of Advocacy, based on data provided by the U.S. Cencus Bureau, Statistics of U.S. Business.

Small businesses need not apply
Quick -- which industries have more large companies than small ones? There aren't many, since small companies outnumber large companies overall. But unless you get a charge out of attacking the big boys, stay out of these businesses:

  • Potash mining
  • Pulp and paperboard mills
  • Glass-container manufacturing
  • Copper smelting and refining
  • Aluminum production
  • Guided-missile and space vehicle-propulsion units
  • Energy pipelines

And by the way ...
The SIC-code system is being supplanted by the new North American Industry Classification System. The differences between the two systems are minimal.

Please e-mail your comments to