Micro-Enterprises Populate More of U.S. Small Business Landscape

    By | Small Business

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    The density of small businesses in the U.S. is at an all-time high, according to research released this week by the Kauffman Foundation. At 3.16 million businesses, or 1,006.6 companies per 100,000 people, the number of small businesses is now above pre-recession levels, according to the 2015 Kauffman Index: Main Street Entrepreneurship, a new report that tracks small business activity and ownership in the U.S., specifically of firms older than five years with less than 50 employees. Kauffman calls it the “the first in-depth analysis of small business activity in America.”

    Kauffman says a major driver of the uptick is the increase in micro-enterprises – businesses with fewer than 10 employees. Their numbers grew by 3.6 percent between 2014 and 2015, compared to 1.2 percent growth among all other established small businesses.

    Still, Kauffman says the long-term trends for small business ownership in the U.S. are not encouraging. Since 1996, the rate of small business owners has declined from 7.8 percent to 6.0 percent of the population, and the density of small businesses has also plateaued since the mid-2000s.

    “Although there has been an overall decline in business ownership, many subgroups of the population are doing quite well in business ownership,” study author Rob Fairlie, professor and chair of economics at the University of California, Santa Cruz, said in a statement.

    Kauffman’s 2015 study also found that men are more than twice as likely as women to own a small business and that immigrants now comprise more than 20 percent of all small business owners, the highest rate yet. Ethnic diversity among business owners is also increasing: African American, Latino, Asian, and other non-white owners comprise 28 percent of small business owners. Nearly 40 percent of owners are college graduates.

    Kauffman says additional reports that provide a more in-depth analysis of the state-level and metropolitan area trends in small business activity will be released December 10.

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