Small businesses account for 98% of all employers in NC

February 15, 2013 at 12:05 pm

The Small  Business Administration’s Office of Advocacy released its state-by-state small business profiles for 2012. In North Carolina, it reports that the over 800,000 small businesses in the state account for 98 percent of all employers and employ almost half of the private sector workforce, or 1.5 million people.

One important distinction to make is how ‘small business’ is defined. The SBA includes all businesses with fewer than 500 employees in its definition. This is a very wide definition, and the differences between the businesses on the small and large ends of the spectrum can be vast.

Very small businesses– those with less than 20 employees–  still make up the majority– 87 percent– of employer firms and 18 percent of employment. While the SBA-defined small business saw a net decrease in jobs by about 67,000, very small  businesses saw a net increase of about 3,400.

Considering the definition of small  businesses is important in order to distinguish between the very different challenges and advantages of different types and sizes of businesses. We have previously blogged about groups or polls claiming to represent the viewpoint of small businesses  when in reality “small” to them may mean something much larger and very different than the mom & pop, Main Street businesses that we work with.  Such a wide category, with businesses employing from 1 to 500 people, really obscures the differences– and these data are often used to develop policy and set guidelines and regulations.

It might be time for the SBA and other agencies that define ‘small business’ according to their own criteria to consider revising and coordinating their use of terms. It would help researchers, analysts, policy makers, and small businesses themselves if we had a consistent definitions. Clearly, small businesses of all sizes play a key role in employing people and creating jobs.  For many communities, small  businesses are the economic engines, creating jobs, providing wages, and generating wealth. With a better picture of each type of business, we can create even better policies and programs to support businesses of all sizes.

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Entry filed under: Economic Development, Economy, Jobs & Employment, Small Business. Tags: , , , , , .

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