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2007 Survey of Business Owners Summaries of Findings

Survey of Business Owners - Characteristics of Businesses: 2007

SCOPE OF THIS REPORT

The Characteristics of Businesses: 2007 is the only report in the U.S. Census Bureau's 2007 Survey of Business Owners (SBO) publication series to provide selected economic and demographic characteristics of U.S. respondent firms. Data aggregates are presented by gender, ethnicity, race, and veteran status of majority owners at the national level by 2007 North American Industry Classification System (NAICS), and employment size and receipts size of firm.

Additional statistics for both employer and nonemployer respondent firms are provided for the following:

  • If the business was family-owned, home-based, franchiser owned, franchised, or jointly owned and operated by spouses
  • Number of owners
  • Year the business was originally established
  • Sources and amount of capital used to start or acquire the business
  • Sources of capital used to finance expansion or capital improvements
  • Types of customers and workers
  • Employer-paid benefits
  • Language(s) used for customer transactions
  • If the business conducted activities outside the United States, whether operations were established, functions outsourced or transferred, or export sales generated as a percent of total sales
  • If the business used the Internet, whether the business had a website, purchased online, or generated e-commerce sales as a percent of total sales
  • Part-time or seasonal self-employment or business activities
  • If the business was operating when surveyed; and if not, the reasons the operations ceased

These data come from the 2007 SBO and were collected as part of the 2007 Economic Census. The SBO includes a sample of more than 2.3 million nonfarm businesses filing 2007 tax forms as individual proprietorships, partnerships, or any type of corporation, and with receipts of $1,000 or more. Firms that responded to questions on selected economic and demographic characteristics of the business represented 14.8 million businesses or 54.5 percent of the nation's 27.1 million nonfarm firms. Firms without employees accounted for approximately 10.5 million, or 71.3 percent of the represented firms.

In the SBO, businesses are defined as either:

  • All firms classifiable by gender, ethnicity, race, and veteran status:
    • Gender classifications include:
      • Women-owned. Women own 51 percent or more of the equity, interest, or stock of the business.
      • Men-owned. Men own 51 percent or more of the equity, interest, or stock of the business.
      • Equally men-/women-owned. Men own 50 percent and women own 50 percent of the equity, interest, or stock of the business.
    • Ethnicity classifications include:
      • Hispanic-owned. Hispanics of any race own 51 percent or more of the equity, interest, or stock of the business.
        • Mexican-owned. Fifty-one percent or more owned by persons of Mexican, Mexican American, or Chicano origin.
        • Puerto Rican-owned. Fifty-one percent or more owned by persons of Puerto Rican origin.
        • Cuban-owned. Fifty-one percent or more owned by persons of Cuban origin.
        • Other Hispanic-owned. Fifty-one percent or more owned by persons of Other Hispanic, Latino, or Spanish origin [for example, Argentinean, Colombian, Dominican, Nicaraguan, Salvadoran, or Spaniard].
      • Equally Hispanic-/non-Hispanic-owned. Hispanics own 50 percent and non-Hispanics own 50 percent of the equity, interest, or stock of the business.
      • Non-Hispanic-owned. Non-Hispanics of any race own 51 percent or more of the equity, interest, or stock of the business.
    • Race classifications include:
      • White-owned. Persons of European, North African, or Middle Eastern origins own 51 percent or more of the equity, interest, or stock of the business.
      • Black-owned. Persons of black African origins, including those who consider themselves to be Haitian, own 51 percent of more of the equity, interest, or stock of the business.
      • American Indian- and Alaska Native-owned. Persons of Native American origins and who maintain tribal affiliations or community attachments, own 51 percent or more of the equity, interest, or stock of the business.
      • Asian-owned. Persons of Asian origin own 51 percent or more of the equity, interest, or stock of the business. These businesses are also classified into the following detailed groups:
        • Asian Indian-owned. Fifty-one percent or more owned by persons of Asian Indian origin.
        • Chinese-owned. Fifty-one percent or more owned by persons of Chinese origin.
        • Filipino-owned. Fifty-one percent or more owned by persons of Filipino origin.
        • Japanese-owned. Fifty-one percent or more owned by persons of Japanese origin.
        • Korean-owned. Fifty-one percent or more owned by persons of Korean origin.
        • Vietnamese-owned. Fifty-one percent or more owned by persons of Vietnamese origin.
        • Other Asian-owned. Fifty-one percent or more owned by persons of Other Asian origin [for example, Hmong, Laotian, Thai, Pakistani, or Cambodian].
      • Native Hawaiian- and Other Pacific Islander-owned. Persons of Native Hawaiian or Other Pacific Islander origin own 51 percent or more of the equity, interest, or stock of the business. These businesses are also classified into the following detailed groups:
        • Native Hawaiian-owned. Fifty-one percent or more owned by persons of Native Hawaiian origin.
        • Guamanian- or Chamorro-owned. Fifty-one percent or more owned by persons of Guamanian or Chamorro origin.
        • Samoan-owned. Fifty-one percent or more owned by persons of Samoan origin.
        • Other Pacific Islander-owned. Fifty-one percent or more owned by persons of Other Pacific Islander origin [for example, Fijian or Tongan].
      • Some other race. Persons of origins not included in the “White,” “Black,” “American Indian and Alaska Native,” “Asian,” and “Native Hawaiian and Other Pacific Islander” categories described above, own 51 percent or more of the equity, interest, or stock of the business. [for example, Brazilian, Cape Verdean, Sudanese, or multiracial].
    • Veteran status classifications include:
      • Veteran-owned. Veterans of the U.S. military own 51 percent or more of the equity, interest, or stock of the business.
      • Equally veteran-/nonveteran-owned. Veterans own 50 percent and nonveterans own 50 percent of the equity, interest, or stock of the business.
      • Nonveteran-owned. Nonveterans own 51 percent or more of the equity, interest, or stock of the business.
  • Publicly held and other firms not classifiable by gender, ethnicity, race, and veteran status.

The SBO also provides data by minority status classifications which include:

  • Minority. Any firm with Hispanic, Black or African American, American Indian and Alaska Native, Asian, or Native Hawaiian and Other Pacific Islander owners or with owners of some other race not classified as “White non-Hispanic,” holding 51 percent or more of the equity, interest, or stock of the business.
  • Equally minority/nonminority. Minorities own 50 percent and nonminorities own 50 percent of the equity, interest, or stock of the business.
  • Nonminority. White non-Hispanics own 51 percent or more of the equity, interest, or stock of the business.

GENDER, ETHNICITY, RACE, AND VETERAN STATUS

Table A [xls, 36K] shows business ownership for SBO respondent firms compared to all U.S. firms by detailed group and for publicly held and other firms whose ownership by gender, ethnicity, race, and veteran status could not be classified.

FAMILY-OWNED BUSINESSES

In 2007, more than one-fourth (28.2 percent) of firms that responded to the SBO were family-owned. This included more than one-third (36.0 percent) of employer respondent firms and one-fourth (25.4) of nonemployer respondent firms.

Among sectors of interest, 44.6 percent of respondent firms operating in the mining, quarrying, and oil and gas extraction (NAICS 21) sector, 46.2 percent of respondent firms operating in the management of companies and enterprises (NAICS 55) sector, and 41.7 percent of respondent firms operating in the accommodation and food services (NAICS 72) sector were family-owned.

Among selected groups by receipts size, about one-fifth (22.6 percent) of respondent firms earning less than $5,000 in receipts were family-owned, as were nearly two-fifths (39.6 percent) of respondent firms earning receipts of $1,000,000 or more.

The majority (86.1 percent) of equally men-/women-owned respondent firms were family-owned. About 11.9 percent of women-owned respondent firms and 15.5 percent of men-owned respondent firms were family-owned.

Nearly three-fourths (71.2 percent) of equally minority-/nonminority-owned respondent firms were family-owned, as were 20.7 percent of minority-owned respondent firms and 28.8 percent of nonminority-owned respondent firms.

HOME-BASED BUSINESSES

In 2007, approximately half (51.6 percent) of all respondent firms operated primarily from someone's home. The percentage of home-based firms in 2007 varied by employer status, kind of business, and size of firm. While less than one-fourth (23.8 percent) of employer respondent firms reported being home-based, nearly two-thirds (62.9 percent) of nonemployer respondent firms were home-based.

Among sectors of interest, 16.0 percent of home-based respondent firms operated in the construction (NAICS 23) sector and 19.9 percent of home-based respondent firms operated in the professional, scientific, and technical services (NAICS 54) sector.

Among selected groups by receipts size, over two-thirds (68.8 percent) of respondent firms earning less than $5,000 in receipts were home-based and 7.7 percent of respondent firms earning receipts of $1,000,000 or more were home-based.

More than half of both women-owned respondent firms (58.2 percent) and equally men-/women-owned respondent firms (58.1 percent) reported being home based, while 49.1 percent of men-owned respondent firms were home-based. The comparable numbers for minority-owned, equally minority-/nonminority-owned, and nonminority-owned respondent firms were 46.5 percent, 56.0 percent, and 54.5 percent respectively.

FRANCHISED BUSINESSES

Approximately 2.1 percent of all firms that responded to the SBO were franchises. Approximately 4.0 percent of employer respondent firms and 1.3 percent of nonemployer respondent firms reported that they operated as a franchise.

Among sectors of interest, 4.2 percent of respondent firms in the retail trade (NAICS 44-45) sector, 9.8 percent of respondent firms in the management of companies and enterprises (NAICS 55) sector, and 14.9 percent of respondent firms in the accommodation and food services (NAICS 72) sector operated as a franchise.

CAPITAL REQUIREMENTS

More than two-thirds (68.0 percent) of respondent firms that required capital to start or acquire the business used personal/family savings or other personal/family assets as a source of start-up capital (71.6 percent of employer respondent firms and 66.5 percent of nonemployer respondent firms). Other sources of capital included business loans from a bank or financial institution, reported by 10.7 percent of respondent firms (19.0 percent of employer respondent firms and 7.3 percent of nonemployer respondent firms) and credit cards, reported by 10.4 percent of respondent firms (10.5 percent of employer respondent firms and 10.3 percent of nonemployer respondent firms). Approximately one-fifth (20.8 percent) of respondent firms required no start-up capital at all (10.6 percent of employer respondent firms and 25.0 percent of nonemployer respondent firms).

Approximately 6 in 10 (61.5 percent) women-owned respondent firms, 8 in 10 (80.0 percent) equally men-/women-owned respondent firms, and 7 in 10 (69.5 percent) men-owned respondent firms used personal/family savings or other personal/family assets as a source of start-up capital. Nearly one-third (30.3 percent) of women-owned respondent firms, 11.5 percent of equally men-/women-owned respondent firms, and 19.5 percent of men-owned respondent firms required no start-up capital.

Approximately 82.1 percent of equally minority-/nonminority-owned respondent firms that required start-up capital to start or acquire the business utilized personal/family savings or other personal/family assets as a source of start-up capital. More than two-thirds of minority-owned respondent firms and nonminority-owned respondent firms (67.2 percent and 69.5 percent respectively) used personal/family savings or other personal/family assets to start or acquire their business. About one-fifth of minority-owned and nonminority-owned respondent firms (21.6 percent and 20.9 percent respectively) and 10.6 percent of equally minority-/nonminority-owned respondent firms required no start-up capital.

Of the respondent firms that required some source of capital to start or acquire the business, roughly 3 in 10 (30.6 percent) needed less than $5,000 for start-up capital. This included 17.5 percent of employer respondent firms and 35.8 percent of nonemployer respondent firms. Approximately 1.5 percent of respondent firms needed $1 million or more to start or acquire the business (including 2.6 percent of employer respondent firms and 1.0 percent of nonemployer respondent firms).

TYPES OF CUSTOMERS

In 2007, 72.7 percent of respondent firms reported that sales to individuals accounted for at least 10 percent of their total sales; 1.9 percent of respondent firms reported that sales to the federal government accounted for at least 10 percent of their total sales; 5.2 percent of respondent firms reported sales to state and local governments accounted for at least 10 percent of total sales; and 35.3 percent of respondent firms reported that sales to other businesses and organizations accounted for at least 10 percent of their total sales.

WORKFORCE

Among employer respondent firms, 75.4 percent had full-time paid employees and 58.0 percent had part-time employees. In addition, 5.3 percent of employer respondent firms used paid day laborers; 7.3 percent used staff from a temporary help service; 1.3 percent used leased employees; and more than one-third (36.1 percent) of employer respondent firms used contractors, subcontractors, independent contractors and/or outside consultants to supplement their workforce.

EMPLOYER-PAID BENEFITS

Less than half (45.3 percent) of employer respondent firms contributed toward their employees health insurance coverage as part of their benefits package. One-fourth (25.1 percent) of employer respondent firms made contributions to their employees' retirement plans, while 6.4 percent offered profit-sharing plans and/or offered stock options to their employees. More than one-half (51.6 percent) of employer respondent firms offered paid holidays, vacation, and/or sick leave. One-third (33.3 percent) of employer respondent firms offered none of the listed benefits.

E-COMMERCE AND EXPORTS

In 2007, 6.6 percent of respondent firms reported e-commerce sales.

Exports comprised at least some of the sales of 7.9 percent of respondent firms in 2007.

Approximately 17.0 percent of respondent firms with receipts of $1,000,000 or more reported that exports made up at least some of their sales.

DATA COMPARABILITY TO PRIOR SURVEYS

Due to changes in methodology and differences in response rates between gender, ethnicity, and race groups, the Characteristics of Business data are not comparable between 2002 and 2007.

The 2007 and 2002 SBO data were published according to the 2007 and 2002 North American Industry Classification Systems (NAICS) respectively. Prior to the 2002 SBO, data were published according to the Standard Industrial Classification (SIC) system. Additional changes affecting data comparability are discussed in detail in Methodology, in the section titled "Comparability of the 2007 and 2002 SBO Data."

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Source: U.S. Census Bureau | Survey of Business Owners | (301) 763-3316 | csd.sbo@census.gov Last Revised: November 16, 2012