The number of small businesses in America in 2005 reached a new high of 25.85 million, according to the SBA Office of Advocacy's annual report to the president on the small-business economy.

"In 2005, the economy was shocked by devastating hurricanes in August and September," Chad Moutray, chief economist for the Office of Advocacy, said in a statement. "Fortunately, for areas outside the Gulf Coast Region, the challenges proved to be short-term phenomena. As a whole, the economy bounced back, led by resilient small businesses."

More small businesses were started in 2005 than were closed, resulting in an estimated 5.99 million firms with employees and 19.86 million sole proprietorships.

The report's analysis of Census Bureau data shows sole proprietorship continues to rise. From 1995-2004 about 0.3 adults per month became primarily self-employed. In 2004, approximately 10.2 percent of the workforce was self-employed.

"Generally, the economy and financial markets were supportive of small-business growth in 2005," Moutray wrote in his letter presenting the report to the White House.

Small business income bears out Moutray's statement. Nonfarm sole proprietorship income was up 7.5 percent in 2005, and corporate income, which represents a mixture of large and small firm business returns, was up by 16.4 percent.

The report also highlights newly released data from the Census Bureau that demonstrates the important role of women in the small-business economy. Women ownership of businesses increased 19.8 percent between 1997 and 2002. In 2002, Women owned 6.5 million businesses, approximately 28.2 percent of all nonfarm U.S. firms.

More than 14 percent of women-owned firms were employers, employing 7.1 million workers and accounting for $173.7 billion in annual payroll in 2002.

"Women's business ownership has greatly influenced the economy in general and women's economic well-being in particular," Ying Lowry, a senior economist at the Office of Advocacy, wrote in the report.

Published on: Dec 22, 2006