Benefits May 7, 2001

Study Shows Small Businesses Growing

May 7, 2001 (PLANSPONSOR.com) - The number of small businesses with fewer than 100 employees has grown from 5.4 million in 1994 to 6.4 million, a new study by LIMRA International finds.
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The decade long expansion led to higher sales volumes, a larger proportion of expanding firms, a lower proportion of struggling firms, and almost universal access to the Internet, according to the research.

The release of the study, which is summarized in a report titled US Small Businesses in 2000: A Dynamic Market, coincides with the start of small business week, which runs from May 6 to 12.

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Small World

Research showed that US small business owners are generally mature, stable, well-educated, affluent, tech-savvy and financially more sophisticated than the average America.

In addition, the study found that:

  • more than half of small businesses are family-owned
  • about 25% are home-based
  • 66% have fewer than five employees
  • 43% are service firms, which are the largest and fastest growing group
  • almost 80% are either expanding or stable.

Line of Succession

The report finds that more than 40% of small business owners have no formal plan for passing their businesses on when they die or retire, despite more than half being over 50.

Other findings include:

  • 70% provide medical benefits, up 20% since 1994
  • small-business owners rely extensively on professionals for advice and assistance
  • personal relationships are important to small-business owners, with two-thirds preferring to deal with a single advisor for both personal and business financial needs.

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