Magazine November 2018

Small Business by the Numbers

Numbers

by Tyler Hale

NumbersAlthough Arkansas is home to several Fortune 500 companies, the vast majority of companies in the state are small businesses. Despite their small size, these companies collectively contribute almost half of the labor force to the state’s economy and have a significant economic impact both at home and on a global scale.

First, it’s important to define what a small business is. Due to federal size standards, small businesses can range in size from one employee to, in some cases, up to 1,500 employees. The Small Business Administration (SBA) establishes size standards which differ from industry to industry and can be determined by profit or by the number of employees.

 

In Arkansas, there are 244,977 small businesses, making up approximately 99.3 percent of the total business landscape in the state. In 2016, small businesses employed 481,170 individuals, which is over 48 percent of the state’s entire labor force. During the same year, total employment in Arkansas was 1,023,854.

According to SBA surveys, there are significantly more male-owned small businesses than female-owned businesses. The SBA estimates that in 2012, there were approximately 122,800 male-owned small businesses compared to 75,900 women-owned businesses.

Arkansas businesses can be further broken down by demographic groups. Over 188,000 small businesses are owned by non-minority owners, compared to 36,000 businesses owned by minority owners. Of this minority-owned business total, African Americans make the largest group with roughly 20,600 small businesses. Hispanic business owners are the second largest demographic group, owning about 8,000 small businesses.

Starting new businesses is a critical part of economic development, and startups have become a significant part of Arkansas’ business ecosystem, particularly in Central and Northwest Arkansas. In 2015, 1,893 new businesses were started in Arkansas. These new companies created 6,168. Of course, there were business casualties during that same time – 1,765 businesses folded, losing 4,509 jobs. However, this was still a net gain of 128 businesses and 1,659 jobs.

Small businesses may be small individually, but their collective strength contributes to the Arkansas economy in a big way. In the top small business industry, health care and social assistance, small businesses employ 51 percent of the total health care workforce – 86,418 individuals. In construction, the sixth largest small business industry by size, 90 percent of workers are employed by small businesses.

Numbers

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