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Census: More Single-Person Businesses

Marc Tracy Bizbox.slate.com

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July 8, 2009

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You're The Boss points to the National Federation of Independent Business's most recent monthly numbers on the percentage of entrepreneurs who believe that the next three months are a "Good Time to Expand". Recently, the figure has risen. However, the post's author concludes: "the percentages over the last few months are still in very low territory compared to where they have been historically. Clearly the recession is taking its toll on the outlook of small-business owners."

But is this historically low outlook really the best indicator of the prospects for entrepreneurial growth? Not necessarily, John Tozzi of The New Entrepreneur might say; and were he to say it, we would agree with him. Tozzi highlights an intriguing statistic produced by none other than the U.S. Census Bureau: that between 2006 and 2007, the U.S. added over one million additional non-employee (which is to say, single-person) businesses. These businesses actually comprise a not-insignificant space in the economic landscape: by 2007, there were 21.7 million of them--19.1 million sole proprietorships, 1.4 million corporations, and 1.2 million partnerships. As you'd expect, the vast majority of these businesses are unincorporated individuals. Their total 2007 revenue totaled nearly a trillion dollars, which, Tozzi notes, is equal to nearly 7% of GDP.

Of course, these are relatively old numbers. But Tozzi makes a compelling point: "I think the long-term trend here is clear: More people working for themselves instead of (or in addition to) being employees. My gut sense is the recession is creating even more entrepreneurs as laid off workers go into business for themselves." We heartily agree. When the job market is bad, one logical step is to remove yourself from it, and pretty the much only way to do that (while still trying to secure an income, obviously) is to start your own business. Just one more component to the Great Rearranging. We'd bet anything that, two years from now, when the Census Bureau releases its 2009 non-employer business data, it will reveal even bigger jumps.

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