Nov. 25 this year is widely recognized as Small Business Saturday, with local commerce groups nationwide, and in the Midstate, encouraging customers to seek out locally-owned small businesses to support.
The push coincides with the holiday shopping season, given that a large portion of small businesses are retail-oriented. But Pennsylvania’s small business landscape is much wider than just the Christmas retail push.
U.S. Census data shows that, in 2015, Pennsylvania was home to 230,057 discreet firms employing over 5.3 million people – or about 23 people per registered employer.
That number is misleading, however, given the vast spread of firm sizes. The majority of Pennsylvania’s businesses — 130,122 firms — employ less than five people. At the same time, a relatively small number of large firms employ the majority of the population, with 4,210 firms at 500 or more employees.
There is no hard definition of “small” business — the federal Small Business Administration often cites numbers based on companies with less than 500 employees. The Census Bureau also provides totals of businesses with less than 20 employees.
Within Census classifications of small business, three categories are dominant — retail, construction, and professional services. While retail is typically the most visible, the latter two account for building tradespeople, lawyers, architects and other specialized workers who are often self-employed.
The other significant statistical issue facing small businesses is their rate of survival. In March of 1994, the Bureau of Labor Statistics recorded 18,930 businesses having opened in Pennsylvania over the previous year. By March of 1999, five years later, 10,503 — or about 55.5 percent — were still open. Of the survivors, average employment was 14.8 workers.
Some of those numbers are much different today. In the 2012 survey year, the BLS found 23,751 businesses opened in PA — a significant increase in start-ups.
But as of 2017, only 10,994 are still running, a 46.3 percent five-year survival rate, indicating that, even with the startup economy running hot, the amount of room for success hasn’t increased that much. Further, the average size of survivors had decreased to eight employees.