Small Business 2001

There's good news and there's bad news when it comes to investigating single-person businesses. The good news: the U.S. Census Bureau just this year released detailed statistics on what it calls nonemployer businesses, which, as it turns out, are surprisingly numerous. The bad news: the data are for 1997, and the Census Bureau is not expected to release more-recent information anytime soon.

Don't despair. The Internet sector notwithstanding, the U.S. economy evolves slowly. And -- surprise -- the solo-operator segment of the business world, despite the glossy images in magazines, does not consist mainly of good-looking thirtysomethings working on laptops beside the pool. What does it include? Plumbers, landlords, hairstylists, lawyers. It's a safe bet that most of the statistics for 1997 haven't changed much.

So here's a look at the soloist landscape -- what we know, what we don't know, and how to interpret the statistics (carefully).

Is the number of soloists increasing? Probably not. The New York Times ran a front-page article last December highlighting a gradual five-year decline in the share of the nonfarm workforce that is self-employed, from 10.9% in 1994 to 9.9% in 1999. To the Times the data -- taken from Labor Department surveys -- were evidence of some kind of sea change in the small-business economy: "Entrepreneurs' Golden Age Turns Out to Be Mythology," read the headline.

In fact, researchers say, the relative decline is probably no more than a side effect of the prolonged economic expansion of the 1990s: companies were desperate for employees and so offered an array of benefits ranging from high salaries and stock options to flexible hours and generous health insurance. "When times are very good," says senior research fellow William J. "Denny" Dennis Jr. of the National Federation of Independent Business, "you get a phenomenon where people have several options, one of which may be starting their own firms. You might think, 'I'd like to start this business, but, gee, I've just been offered $10,000 more by my company.' What are you going to do?"

If the economy stays slow for a while, the proportion of people who are self-employed may again grow.

Industries in which soloists account for more than 50% of all revenues:

Barber shops
Nail salons
Translation and interpretation services
Artists, writers, and performers

Source: U.S. Census Bureau, 1997 Economic Census: Nonemployer Statistics.

Soloists: What they do

Number of one-person businesses: 15.4 million
Total revenues of those businesses: $586 billion
Soloists' revenues as a percentage of all business sales and receipts: 3.3%

Biggest soloist economic sectors
(by revenues, in billions of dollars)

Real estate and rental
and leasing



Professional, scientific,
and technical services


Retail trade

Biggest soloist industries
(by revenues, in billions of dollars)

Long-distance freight trucking

Direct sales

Used-car dealers

Insurance agencies and brokerages

Legal services

Physicians' offices

Source: U.S. Census Bureau, 1997 Economic Census: Nonemployer Statistics.

And by the way ...

The census figures on nonemployer businesses are based on the number of business tax returns that report more than $500 in revenues. Of course, some people have multiple businesses. Thus a self-employed insurance agent who is a landlord and who also raises Tennessee walking horses on the side fills out three separate tax returns and counts as three soloists.

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