Microbusiness Fact Sheet

Definitions

"Microbusiness" is a term generally used to refer to firms with fewer than five paid employees. Some (such as the National Association for the Self-Employed) use the term to refer to firms with fewer than ten employees.

Because microbusinesses are better defined not by their size but by how their size effects their operations, The MicroEnterprise Journal uses a more accurate qualitative definition: a microbusiness is any firm that is so small that there is no one working in the business that does only one job or task for the business.

Numbers

> Of a total 26.8 million U.S. firms, approximately 24.5 million, or 91.2%, are microbusinesses (2006; U.S. SBA, Office of Advocacy)

> Approximately 95.2% of U.S. firms have fewer than ten employees (2006)

> Nonemployer businesses — defined as firms with no paid employees outside the business owner(s) — comprise the lion's share of the microbusiness population. There are approximately 20.8 million nonemployer firms in the U.S. (2006; U.S. Census Bureau)

> Nonemployer businesses make up 77.5% of all U.S. firms (2006)

> During the period from 1997 through 2006, the percentage of microbusinesses among U.S. firms increased from 87% to 91.2%, while the percentage of non-micro small businesses decreased from 13% to 8.7%. Firms with more than 500 employees has remained fairly constant at less than 0.1% of U.S. businesses.

> Each new nonemployer firm represents one new self-created job. In 2005, new nonemployer firms created an average of 72,361 new jobs per month. Job creation through nonemployer firm births are not included in monthly employment data released by the U.S. Department of Labor

> Nonemployer firms generated $970 billion in receipts in 2006. This represents 7.4% of gross domestic product for 2006. Average annual receipts for nonemployer firms in 2006 was $46,724 per firm.

"In the real world, the smallest atom in the universe is the hydrogen atom. And yet, hydrogen is the fuel that powers suns." -- Dawn Rivers Baker