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Number of U.S. Companies that Reach $100-Million in Annual Revenues Remarkably Stable Over Past 20 Years, According to Kauffman Paper
Source: Kauffman Foundation
The pace at which the United States produces $100-million companies has been stable over the last 20 years despite changes in the economy. However, according to a new Kauffman paper released today, the locations and sectors in which those companies are created are changing.
In the paper, "The Constant: Companies that Matter," Kauffman Foundation Senior Fellow Paul Kedrosky explores the rate and founding locations of companies in the United States that "matter" from 1980 to present.
Kedrosky uses three criteria to define companies that matter: They must be scalable, quickly reaching $100 million or more in revenues; they must be able to generate jobs quickly and broadly; and, they must be disproportionate creators of wealth, both directly through profits and salaries and indirectly through equity.
"Companies unable to reach $100 million in revenues are still relevant to the economy," Kedrosky says. "But the $100-million firms meet an entirely different threshold that gives cities, states and countries an even greater economic advantage."
Anywhere from 125 to 250 companies per year (out of roughly 552,000 new employer firms) are founded in the United States that reach $100 million in revenues. The largest contributors, in percentage terms, are from the consumer discretionary and industrials sectors. Taking into account sectoral contribution to U.S. GDP, the information technology sector produces more $100-million companies than might be expected.
Geographically, the most productive region in terms of $100-million company production is the U.S. southeast (Georgia, Florida, Kentucky, Louisiana) with the Pacific region (California, Oregon, Washington, Hawaii) coming in second. Following closely behind are the Mid-Atlantic and Central regions. Most regions are balanced with regard to sector, except for the Pacific region, which produces only slightly fewer $100-million information technology companies than the rest of the country combined, most of which are in California.
Alleviating Poverty: Mobile Communications, Microfinance and Small Business Development Around the World
Source: Brookings Institution
Poverty is one of the most pressing problems around the world. According to statistics from the World Bank, nearly one-quarter of the global population lives at or below the poverty line of $1.25 per day.[i] With so many people struggling for basic subsistence, it is hard for those affected to get out of poverty, gain access to capital, or develop small firms or businesses that help them build a better life.
Yet with the growth of mobile technology, there are new opportunities for individuals and small businesses to lift themselves up. People can use handheld devices to make monetary transfers, arrange for microfinance loans, establish small enterprises, and improve their economic circumstances. This helps them alleviate poverty and create a better situation for themselves and their families.
Jeffrey Sachs, director of Columbia University’s Earth Institute, said that wireless communication is a breakthrough technology that helps to solve the worst problems associated with health care, poverty, and educational access. "Now in every village where I go, someone’s got a cell phone, somebody can make an emergency call, someone can find out the price on the market, someone can start a business empowered by the fact that they can reach a customer or a supplier, someone can drive a taxi or a truck for that reason as well. Everything is changing," said Sachs.[ii]
In this Mobile Economy Project report, Darrell West looks at the growth of handheld devices and investigates the barriers to doing business in the developing world. In particular, West explores how mobile devices enable individual entrepreneurship and small business development. Despite the presence of barriers such as corruption, lack of transparency and capital, and poor infrastructure in many parts of the developing world, there are successful ventures enabled by mobile technology.
The report details some of the cases which illustrate emerging possibilities for alleviating poverty in different countries including:
- The growth of mobile devices
- Mobile money transfer services
- Mobile tools for small businesses
- Microfinance applications
Canada’s Red Tape Report with U.S. Comparisons
Canada’s Red Tape Report with U.S. Comparisons
Source: Canadian Federation of Independent Business
Most Canadian small businesses pay much more than their U.S. counterparts to comply with regulatory requirements, according to CFIB’s 2013 version of Canada’s Red Tape Report.
The report coincides with the launch of Red Tape Awareness Week™, and provides a first-ever direct comparison of regulatory compliance costs in the U.S. and Canada.
The U.S. comparison was sponsored by KPMG Enterprise™.
The smallest businesses in Canada (fewer than five employees) pay 45% more per employee ($5,942) to comply with government regulation than their U.S counterparts ($4,084).
The total cost of regulation to Canadian businesses is $31 billion a year.
On both sides of the border, business owners say that regulatory costs could be reduced by about 30% while upholding the important health and safety objectives of regulation. This would mean a $9 billion yearly stimulus to the Canadian economy.
Three Essays on Entrepreneurship in India and the U.S.: Policies, Social Ties and Mobility
Three Essays on Entrepreneurship in India and the U.S.: Policies, Social Ties and Mobility
Source: RAND Corporation
Across the globe, policymakers view entrepreneurship as a potential route out of poverty, even for the most disadvantaged. Many countries have developed policies to encourage business creation within this group. These dissertation papers explore the role entrepreneurship plays in the lives of the economically disadvantaged in both India and the US. The first paper examines how India’s Micro, Small and Medium-sized Enterprise (MSME) policies affect low-income and female entrepreneurship. In addition to important policy effects, a key finding highlights that entrepreneurial social ties significantly correlate with early-stage entrepreneurship, regardless of income level. The second paper explores this result by instrumenting for the endogeneity of entrepreneurship and social ties using past vernacular newspaper circulation and population density. Instrumental variables regression substantiates the non-instrumented finding indicating social ties play a non-trivial role in increasing early-stage entrepreneurship in India. Finally, analysis of data from the US Panel Study of Income Dynamics in the third paper finds no evidence that self-employment provides any particular advantage in achieving upward mobility, or in reducing downward mobility. In contrast, family business ownership associates with more upward mobility and less downward mobility. We instrument for the endogeneity of family business ownership and mobility using tax schedule progressivity. Instrumental variables regression results substantiate the non-instrumented findings but should be interpreted with some caution.
The Small Business Economy 2012
The Small Business Economy 2012
Source: U.S. Small Business Administration
For 35 years, the Office of Advocacy has produced a series of annual reports on American small businesses titled, from 1982 to 2000, The State of Small Business and from 2001 to the present, The Small Business Economy. This is a rich collection of information about small business contributions to the economy and trends over time. In 2011, the Office of Advocacy began offering the key data on small businesses in tabular form online in place of the paperback report. This format increases the accessibility of the data for Advocacy’s stakeholders.
New From the GAO
New GAO Report
Source: Government Accountability Office
ENTREPRENEURIAL ASSISTANCE
Opportunities Exist to Improve Programs’ Collaboration, Data-Tracking, and Performance Management
GAO-13-452T
New From the GAO
New GAO Reports
Source: Government Accountability Office
INFORMATION TECHNOLOGY
DHS Needs to Enhance Management of Major Investments
GAO-13-478T
SECURITY ASSISTANCE
Evaluations Needed to Determine Effectiveness of U.S. Aid to Lebanon’s Security Forces
GAO-13-289
VETERAN-OWNED SMALL BUSINESSES
Planning and Data System for VA’s Verification Program Need Improvement
GAO-13-425T
CRS — Small Business Administration: A Primer on Programs
Small Business Administration: A Primer on Programs (PDF)
Source: Congressional Research Service (via Federation of American Scientists)
The Small Business Administration (SBA) administers several types of programs to support small businesses, including loan guarantee programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion.
Congressional interest in the SBA’s loan and contracting programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity, create jobs, and assist in the national economic recovery. Many Members of Congress also regularly receive constituent inquiries about SBA disaster loans, the loan guarantee programs, and contracting programs.
This report provides an overview of these programs, including changes made by P.L. 111-5, the American Recovery and Reinvestment Act of 2009, P.L. 111-240, the Small Business Jobs Act of 2010, and P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013. It also provides an overview of the SBA’s budget. This report references other CRS reports that examine the SBA’s programs in greater detail.
2012 Small Business Profiles for States and Territories
2012 Small Business Profiles for States and Territories
Source: U.S. Small Business Administration
The Office of Advocacy’s Small Business Profiles for the States and Territories supply data on small businesses in each of the 50 states and the District of Columbia. The publication also provides national-level data and limited data on the U.S. territories. The usefulness of the publication is the great detail it provides about small businesses at the state level. The following topics are covered: the number of firms, demographics of business ownership, small business income, banking, business turnover, industry composition, and employment gains and losses by size of business. Detailed historical data may be found in the Small Business Economy.
New From the GAO
New GAO Report
Source: Government Accountability Report
VETERAN-OWNED SMALL BUSINESSES
Planning and Data System for VA’s Verification Program Need Improvement
GAO-13-95, Jan 14, 2013
New From the GAO
New GAO Reports
Source: Government Accountability Office
REGIONAL ALASKA NATIVE CORPORATIONS
Status 40 Years after Establishment, and Future Considerations
GAO-13-121, Dec 13, 2012
CHILDREN’S MENTAL HEALTH
Concerns Remain about Appropriate Services for Children in Medicaid and Foster Care
GAO-13-15, Dec 10, 2012
BORDER PATROL
Key Elements of New Strategic Plan Not Yet in Place to Inform Border Security Status and Resource Needs
GAO-13-25, Dec 10, 2012
RETIREMENT SECURITY
Annuities with Guaranteed Lifetime Withdrawals Have Both Benefits and Risks, but Regulation Varies across States
GAO-13-75, Dec 10, 2012
ENVIRONMENTAL PROTECTION
EPA Should Develop a Strategic Plan for Its New Compliance Initiative
GAO-13-115, Dec 10, 2012
Mid-Market Perspectives: America’s Economic Engine – Why Entrepreneurs Matter
Mid-Market Perspectives: America’s Economic Engine – Why Entrepreneurs Matter
Source: Deloitte
Can mid-sized companies benefit from adopting entrepreneurial behavior most often attributed to start-ups? According to this fourth research report from Deloitte Growth Enterprise Services, based on results from a September 2012 survey of 652 mid-market executives, the answer is yes.
Among the findings highlighted in the “Mid-market perspectives: America’s economic engine – why entrepreneurs matter” report:
- Companies that have become more entrepreneurial are succeeding at a faster pace. They cite organic growth in existing markets and innovative products and strategies as their highest priorities.
- Sixty-six percent of respondents expect job growth in the next year will come from mid-sized privately held companies and small businesses.
- Fifty percent of respondents say the uncertain economic outlook is their company’s main obstacle to growth; consistent with previous reports, 46 percent of executives think the level of uncertainty is higher than one year ago.
Is the United States the best place for entrepreneurs to start a business? Only 59 percent of respondents said yes – a marked contrast to the 87 percent who said it was the best place to do so in the past.
CRS — Small Business Size Standards: A Historical Analysis of Contemporary Issues
Small Business Size Standards: A Historical Analysis of Contemporary Issues (PDF)
Source: Congressional Research Service (via University of North Texas Digital Library)
Small business size standards are of congressional interest because the standards determine eligibility for receiving Small Business Administration (SBA) assistance as well as federal contracting and tax preferences. Although there is bipartisan agreement that the nation’s small businesses play an important role in the American economy, there are differences of opinion concerning how to define them. The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the SBA to establish size standards for determining eligibility for federal small business assistance. The SBA currently uses two size standards to determine SBA program eligibility: industry-specific size standards and an alternative size standard based on the applicant’s maximum tangible net worth and average net income after federal taxes.
The SBA’s industry-specific size standards determine program eligibility for firms in 1,047 industrial classifications in 18 sub-industry activities described in the North American Industry Classification System (NAICS). The size standards are based on the following five measures: number of employees, average annual receipts in the previous three years, asset size, annual megawatt hours of electric output in the preceding fiscal year, or a combination of number of employees and barrel per day refining capacity. Overall, the SBA currently classifies about 97% of all employer firms as small. These firms represent about 30% of industry receipts.
The SBA has always based its size standards on economic analysis of each industry’s overall competitiveness and the competitiveness of firms within each industry. However, in the absence of precise statutory guidance and consensus on how to define small, the SBA’s size standards have often been challenged, typically by industry representatives seeking to increase the number of firms eligible for assistance and by Members concerned that the size standards may not adequately target assistance to firms that they consider to be truly small.
During the 111 th Congress, P.L. 111-240, the Small Business Jobs Act of 2010, authorized the SBA to establish an alternative size standard using maximum tangible net worth and average net income after federal taxes for both the 7(a) and 504/CDC loan guaranty programs. It also established, until the SBA acted, an interim alternative size standard for the 7(a) and 504/CDC programs of not more than $15 million in tangible net worth and not more than $5 million in average net income after federal taxes (excluding any carry-over losses) for the two full fiscal years before the date of the application. It also required the SBA to conduct a detailed review of not less than one-third of the SBA’s industry size standards every 18 months.
This report provides a historical examination of the SBA’s size standards, assesses competing views concerning how to define a small business, and discusses how the Small Business Jobs Act of 2010 might affect program eligibility. It also discusses H.R. 585, the Small Business Size Standard Flexibility Act of 2011, which would authorize the SBA’s Office of Chief Counsel for Advocacy to approve or disapprove a size standard proposed by a federal agency if it deviates from the SBA’s size standards. The SBA’s Administrator currently has that authority. It also discusses H.R. 3987, the Small Business Protection Act of 2012, and H.R. 4310, the National Defense Authorization Act for Fiscal Year 2013, which would require the SBA to make available a justification when establishing or approving a size standard that the size standard is appropriate for each individual industry classification within a grouping of four-digit NAICS codes. These two bills also address the SBA’s recent practice of combining size standards within industrial groups as a means to reduce the complexity of its size standards and to provide greater consistency for industrial classifications that have similar economic characteristics.
Small Business Quarterly Bulletin — Third Quarter 2012
Small Business Quarterly Bulletin — Third Quarter 2012 (PDF)
Source: U.S. Small Business Administration
From email:
The latest small business data showed positive movement, with business bankruptcies on the decline and an increase in income for business owners. Two metrics that showed mixed results were the growth of self-employed individuals and tightening loan demand. These and other data for the third quarter of 2012 are available in the Office of Advocacy’s Small Business Quarterly Bulletin.
Financial Viability and Retirement Assets: A Look at Small Business Owners and Private Sector Workers
Source: U.S. Small Business Administration
Highlights
• Having an underwater mortgage did not have a significant effect on the likelihood that a small business owner invested in retirement assets or on the amount of retirement assets they accumulated.
• On the other hand, having an underwater mortgage increases the likelihood that private sector workers had a retirement account and increases the amount that these workers invest in retirement accounts.
• Owners of smaller businesses (fewer than 25 workers) were significantly less likely to invest in retirement assets and had lower amounts than owners of larger firms.
• The data depict the differences in asset allocation choices between small business owners and wage and salary workers and the use of different assets for retirement purposes.
• Wage and salary worker retirement plan behavior exhibited a similar pattern with respect to employment in smaller versus larger firms.
• The study’s findings suggest the following:
- There is a need to reexamine federal rules and regulations written to equalize the benefits within companies between workers and highly compensated individuals/owners to help both business owners and wage and salary workers increase their ownership and accumulation of individual account retirement assets.- In addition, new policies to expand automatic enrollment to owners as well as workers may need to be considered.
Learnings from Startup America Partnership’s first 18 months show networks and resources critical for startup growth should begin at the regional level
Source: Ewing Marion Kauffman Foundation
How does a newly formed nonprofit organization tasked with helping entrepreneurs across America effectively serve startups that are in different places, in different industries and with wildly different needs? Region by region.
This is the central lesson found in "The Start Uprising," a white paper released today by the Ewing Marion Kauffman Foundation that examines where the Startup America Partnership started and where it is now. It is a story chock full of lessons for anyone interested in being a catalyst for entrepreneurship.
Launched at the White House in January 2011 as a demonstration project by the Kauffman Foundation and the Case Foundation, Startup America Partnership initially focused on helping entrepreneurs get their companies off the ground by delivering free or low-cost services and connecting them with large corporations.
By mid-2012, however, the initiative’s leaders had discovered that what startup entrepreneurs need most is the mentorship and fellowship of other entrepreneurs who can help them avoid missteps and point them toward customers, funders and talent. This learning shifted Startup America Partnership’s focus toward becoming the catalyst for a movement of entrepreneurs, by entrepreneurs, through startup regions.
"This paper sums up why a startup region strategy has become Startup America Partnership’s organizing principle, and how their experience can benefit any organization that wants to promote entrepreneurship," said Dane Stangler, director of research and policy at the Kauffman Foundation. "What Startup America Partnership seeks to achieve is critically important to America’s economic recovery and long-term prosperity. The more they can provide connections and resources locally that help startups grow faster, the more quickly these companies will become job creators."
Pivoting to regional hubs was a response to what the Startup America Partnership team learned was a lack of connectedness among entrepreneurs and is consistent with Kauffman research that challenged misconceptions about where high-growth companies start and what entrepreneurs need to succeed.
Then and Now: America’s New Immigrant Entrepreneurs, Part VII
Then and Now: America’s New Immigrant Entrepreneurs, Part VII (PDF)
Source: Ewing Marion Kauffman Foundation
This study examined the complex relationships between immigration and economic development in an increasingly globalized economy. It sought to update the findings of the 2007 report by analyzing whether changes in the pace of immigrant entrepreneurship have occurred. Out of a total of 107,819 engineering and technology companies founded in the last six years, it examined a random sample of 1,882 companies to identify whether a key founder was foreign-born.
The study found that, for the first time in decades, the growth rate of immigrant-founded companies has stagnated, if not declined. In comparison with previous decades of increasing immigrant-led entrepreneurism, the last seven years has witnessed a flattening out of this trend. The proportion of immigrant-founded companies nationwide has dropped from 25.3 percent to 24.3 percent since 2005. While the margins of error of these numbers overlap, they nonetheless indicate that immigrant-founded companies’ dynamic period of expansion has come to an end.
We also performed a special analysis of Silicon Valley, which is widely known as the international hub for technological development and innovation. The findings indicate that 43.9 percent of Silicon Valley startups founded in the last seven years had at least one key founder who was an immigrant. This represents a notable drop in immigrant-founded companies since 2005, when 52.4 percent of Silicon Valley startups were immigrant-founded.
CRS — What is “Small”? Definition of Small Business in the Patient Protection and Affordable Care Act
What is "Small"? Definition of Small Business in the Patient Protection and Affordable Care Act (PDF)
Source: Congressional Research Service (via Rep. Michelle Bachman)
This memorandum provides a brief description of the ACA provisions that apply to employers, focusing on how each provision defines"small" and affects employers of different sizes. The memorandum also identifies what definition of employee is used. Three types of provisions are described: employer responsibilities regarding health insurance coverage; employer reporting requirements; and other employer incentives to provide health insurance coverage.
How Mobile Technology is Driving Global Entrepreneurship
How Mobile Technology is Driving Global Entrepreneurship
Source: Brookings Institution
Darrell West examines mobile entrepreneurship’s key role in expanding opportunities for social and economic development around the world. Examining places like Nigeria, Egypt, and Indonesia, West notes that micro-entrepreneurs generate 38 percent of the gross domestic product, generating new ideas, business models, and ways of selling goods and services.
As part of the Center for Technology Innovation’s Mobile Economy Project, West analyzes the importance of wireless technology for entrepreneurship, how mobile improves access to capital and market information, how it helps entrepreneurs serve broader geographic areas and reach new customers, the manner in which it empowers women and the disadvantaged, and the way mobile payments stimulate economic development.
West offers policy recommendations that outline the steps needed to overcome current barriers to m-entrepreneurship.
The Small Business Advocate, October 2012
The Small Business Advocate, October 2012
Source: U.S. Small Business Administration
The October issue of The Small Business Advocate reports on the Office of Advocacy’s September conference in Seattle, “Small Business and Government: Maximizing Entrepreneurship, Driving Innovation.” In presentations, panels, and hands-on activities, representatives of government and research institutions came together with cutting-edge, visionary entrepreneurs, small business owners, and investors, to learn how government can most effectively promote innovation and businesses can benefit from a relationship with government.
