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Mary Frauenfelder

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Almost Half of All U.S. Small Businesses Home-Based, Census Bureau Reports

Nearly half of the 17 million small businesses in the United States were home-based, according to a new report released today by the Commerce Department's Census Bureau.

"Only 2 percent of these home-based businesses had $250,000 or more in receipts while 74 percent brought in less than $25,000," said Mary Frauenfelder, author of the report, 1992 Characteristics of Business Owners, CBO92-1.  "Most small business owners worked less than 40 hours a week and their businesses were not their primary source of income," she said.

More than 14 million of the 17 million small businesses in the United States (82 percent) were owner-operated and had no paid employees.

Other highlights from the 1992 report include:

• Most owners had prior work experience. More than half of the small business owners had 10 or more years of work experience before starting or acquiring their businesses, and half had a close relative who was a business owner.
• Many owners were college educated. Thirty-five percent of the owners had at least a bachelor's degree and 42 percent of the owners of service businesses had bachelor's and/or professional degrees.
• Capital commitments were modest. Fifty-seven percent of the owners started or acquired their businesses with less than $5,000 in capital and 25 percent required no capital. Only 19 percent used capital based on a personal loan.
• Minority firms draw minority customers. Forty-four percent of African American-owned businesses reported that more than half their customers were minorities; Hispanic-owned firms reported 33 percent; Asian and Pacific Islander, American Indian, and Alaska Native firms, 26 percent; and nonminority male firms, 9 percent.
• Women-owned businesses hire proportionately more women. Thirty-five percent of women-owned employer firms reported 75 percent or more of their work force was female, compared to less than 24 percent of the nonminority male-owned firms.

The full report and tabulations show owner and business characteristics by race, ethnicity, sex, kind of business and legal form of organization for individual proprietorships, partnerships and subchapter S corporations (a subchapter S corporation is a special Internal Revenue Service designation for legally incorporated businesses with 35 or fewer shareholders who, because of tax advantages, elect to be taxed as individual shareholders rather than as corporations).

The data in this report are subject to sampling variability, as well as nonsampling errors.  Sources of nonsampling error include errors of response, nonreporting and coverage.  Measures of sampling variability, presented as relative standard errors, are shown in the publication tables.

The Internet address is below. To obtain a paper copy of the report, call the Public Information Office on 301-457-3030.

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The Census Bureau pre-eminent collector and provider of timely, relevant and quality data about the people and economy of the United States.  In more than 100 surveys annually and 20 censuses a decade, evolving from the first census in 1790, the Census Bureau provides official information about America's people, businesses, industries and institutions.