Knowing Small Business Demographics Critical to Success

SCOTTSDALE, Ariz., September 18, 2002 ≠ Small businesses and organizations have been among the most adversely affected in the recent economic downturn, experiencing significant declines in both the number of firms and employees in 2001, according to In-Stat/MDR ( However, with a recovery seemingly under way, the number of small business firms is anticipated to grow by roughly 3% in 2002 and by 2006, the high-tech market research firm projects that the number of small business firms and organizations will rise to 2.7 million, and will employ roughly 42 million workers.
“Certainly, 2001 was a difficult year across the board, but the impact of a sluggish economic environment has been particularly pronounced in the small business market,” says Kneko Burney, Director ≠ Business Infrastructure and Services at In-Stat/MDR. “Regardless, the small business market continues to be one of the most dynamic and interesting market opportunities available today, even in such a challenging economic climate. Understanding the fundamentals of this market, in terms of vertical industry, distribution of employment and other macroeconomic trends will be key to vendors’ ability to develop successful sales and market strategies for this market.” According to In-Stat/MDR research, this segment will continue to evolve, with the services-based industries growing most quickly in the coming years.
In-Stat/MDR has also found that:
– There will be approximately 2.3 million small businesses and organizations by the end of 2002 (up from 2.2 million in 2001), representing over one fifth of firms in the US at that time. As economic conditions improve, relatively strong growth rates of around 4% are expected for the number of firms from 2003 to 2006.
– Employment suffered much less than the number of firms. Businesses and organizations with 5 to 99 employees will provide jobs to nearly 38 million workers this year.
– The services vertical is the largest in the small business market, in terms of the number of firms, followed by retail trade. Comparing the small business market to other segments, the percentage of retail trade firms is highest in this market, comprising 16% of firms.
– Within the small business market, construction and the services vertical make up a larger percentage of firms in the segments with fewer than 20 employees. Construction makes up only 9% of firms with 50 to 99 employees, but 12% of firms with 5 to 9 workers. The
trend is even more pronounced in the services vertical, which has 33% of the 50 to 99 sub-segment, and 40% of firms with 5 to 9 employees.