Featured Indicator: Small, Medium or Large - Which Businesses are Driving Growth in Your Community?

Overall, we can see that businesses with 2-9 employees were the most successful across all geographies in the ten year period, while Stage 4 businesses, those with 500 or more employees, fared the worst.

Last month's indicator looked at business dynamism—the process by which firms enter, exit, expand, or contract, while creating new jobs, and destroying or relocating others. My colleague Bryant noted that overall business dynamism has steadily declined in all fifty states and nearly all U.S. metropolitan areas. This is a worrying economic trend that displays possible signs of difficulty for entrepreneurs attempting to start new businesses in the United States. To continue the discussion on business dynamism, I wanted to investigate locally, how New York State, the Albany-Schenectady-Troy MSA, and Saratoga County all fared when compared to the United States in terms of the percent change in establishments by size between 2003 and 2013. The Albany-Schenectady-Troy MSA consists of Saratoga, Schenectady, Schoharie, Albany and Rensselaer counties. 

The following graph shows the percent change in number of establishments by size between 2003 and 2013. The size categories are subdivided into the five business stages based on employment size:

  • Self-employed – 1 employee
  • Stage 1 – 2 to 9 employees
  • Stage 2 – 10 to 99 employees
  • Stage 3 – 100 to 499 employees
  • Stage 4 – 500 or more employees

The number of self-employed businesses increased by 10% in Saratoga County, which was on par with the changes in New York State and the rest of the county, which both experienced an 8% increase. However, the Albany MSA as a whole only saw an increase of 1% in sole-proprietorships. The Albany MSA did outperform New York State in the growth of establishments with 2-9 employees by 8%. Saratoga County saw 10% more growth than the MSA in the same category. Yet, New York State, the MSA and Saratoga County all under performed compared to the United States, as Stage 1 businesses increased nearly 50% nationally between 2003 and 2013. Saratoga County stands out among Stage 2 establishments, increasing by 14%, which is 6% higher than the MSA or the United States. The number of Stage 3 businesses jumped by nearly a quarter in the last decade in the Albany MSA, which is more than double the increase than the next largest gain, 9% by New York State. Across all four geographies, the Albany MSA was the only location that did not lose a percentage of its establishments with 500 employees or more; instead it gained 8%. Saratoga County lost the greatest percentage of Stage 4 business, -14%. Nationally, the number of Stage 4 business decreased by 8%.

According to these statistics, small businesses performed much better than larger companies over the last decade in New York State, Saratoga County and the United States. Small business growth can be used as one gauge of the economy’s overall health. The Small Business Association (SBA) reports that small business indicators are improving. First, rising incomes for sole proprietors, combined with low levels of bankruptcies for the same group, mean that self-employed businesses are not only making enough revenue to keep their business afloat, but they are now making a profit, which means they can purchase consumer goods and contribute back to the economy.2 Similarly, Dun & Bradstreet’s August 2015 U.S. Economic Health Track reported that after three months of decline, their small business health index increased by 2.1 points. They reported declines in payment and credit card delinquency, as well as an increase in credit card use, showing more confidence and stabilization of small businesses.3

These upticks in the small business economy are vital to New York State, as the Small Business Administration reports, there are just over 2 million small business in NY. To further break it down, there are:

  • 445,853 small businesses with employees
  • 1.6 million small businesses without employees
  • 3.8 million workers employed by small businesses
  • According to Statistics of U.S. Businesses, New York's small business employed over half of the state's private workforce, or 3.9 million, in 2012

Overall, we can see that businesses with 2-9 employees were the most successful across all geographies in the ten year period, while Stage 4 businesses, those with 500 or more employees, fared the worst. While the small business growth is an encouraging sign for the economy, the loss of major companies in towns and cities have major ramifications, not just for employment but for consumer confidence and community morale.

The data for the graph was collected from Youreconomy.org. The site compiles longitudinal establishment-level data that allows anyone, from an economic developer to a small business owner, to see the changes in the economy based on the size of business, openings, closings, sales, and jobs. YE uses the National Establishment Times Series (NETS) database, which supplies the establishment-level data for over 56 million companies from 1990 through 2013 providing detailed information about jobs, sales, and establishments. The interface is quite easy to use and easy to understand for those who might not be the most data savvy. I recommend playing around a bit with the timeframe and region to get a better understanding of what the data is telling you, and how it compares to other regions.

Cover image courtesy of Francisca Arevalo at The Noun Project. 

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