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| How Many Businesses Are There in the U.S.? |
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| Any attempt to pin down the number of privately-held businesses
is an impossible task. In a 2003 interview with Hector Barreto,
then the Administrator of the SBA, he said,
“There are between 23 million and 25 million small businesses
in the U.S.” Apparently,
even the SBA doesn't have a handle on exactly how many
businesses there are.
According to U.S. Government data from 2001 (the latest available),
there were 5,657,774 firms with a payroll. This figure includes
703,774 firms with no employees,
but that apparently had the owner on a payroll status. If this
figure is subtracted from the total, it leaves 4,954,000 firms
with one or more employees. There is another piece of data that
is interesting – the 5,657,774 firms represent
7,095,302 establishments. In
other words, the 5,657,774 actually have an additional 1,437,528
outlets, branches, etc.
Recent data from www.bizstats.com, based on government figures,
shows that there are 25,007,501 (25 million rounded) businesses
filing income tax returns. The breakdown,
along with legal structure, is as follows: |
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| legal structure |
# businesses |
% of businesses |
| Sole Proprietorships |
17,904,731 |
71.5% |
| Partnerships |
1,338,796 |
5.4% |
| Limited Liability Companies |
718,704 |
2.9% |
| Corporations |
5,045,270 |
20.2% |
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| The interesting thing about the number of businesses in the U.S. is that it can be almost
anything that anyone wants it to be. Some people or companies may tell the world that
there are over 25 million businesses, and others will say that there are only 5.6 million.
They will both be right.
BizStats introduces its chart titled Total Number of US Businesses with the following
statement, “There are over 24 million business entities filing income tax returns
(a number that is growing about 2% annually), but nearly 60% reported annual receipts
of less than $25,000. This includes self-employed individuals such as 650,000 real estate
agents, over 600,000 nannies, and close to one million direct sales ventures such
as Amway and Mary Kay Cosmetics, as well as many part-time and hobby ventures.
Consequently, what constitutes a ‘real’ business is ultimately in the eyes of the beholder.” |
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| Number of US Businesses by Number of Employees |
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| Number of employees |
number of firms |
average number of employees |
% of all employer firms |
% of all total employment |
| Less than 5 |
3,389,161 |
1.7 |
60.4% |
5.1% |
| 5-9 |
1,012,954 |
6.6 |
18.1% |
6.0% |
| 10-19 |
605,693 |
1304 |
10.8% |
7.3% |
| 20-99 |
501,848 |
39.3 |
8.9% |
17.8% |
| 100-499 |
81,347 |
192.2 |
1.5% |
14.1% |
| more than 500 |
16,740 |
3,284 |
.3% |
49.7% |
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Note:
All businesses in the Less than 5 category have at least one employee.
Information, except Average Number of Employees, is from BizStats.com |
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| It
is interesting to divide the number of employees by the number of firms
in each category. In the Less than 5 category, the average number of
employees is actually 1.7 employees – so approximately 60 percent of
all businesses with 5 or less employees actually only have 1.7. That’s
a lot less than five. In fact, the average number of employees is
considerably less than the numbers used in the category itself. It’s
only when you get to the more than 500 employee category that the
number really escalates: the average number of employees in this
category is approximately 3,300. |
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How Much Do They Make?
HERE IS ONE BREAKDOWN OF ANNUAL REVENUE BY NUMBER OF EMPLOYEES |
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| How Many Sell? |
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| Category |
# businesses |
# for sale |
#that sell |
| General Business Brokerage |
4.9 million |
998,000 |
206,500 |
| The Larger Business |
566,000 |
113,000 |
37,500 |
| The Mid-Sized Company |
90,000 |
9,000 |
5,600 |
| The Large Company |
33,600 |
3,360 |
2,000 |
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| Note:
All figures are rounded and totals may be slightly more or less than
100 percent. They are estimates only. The term "sell" refers to an
actual sale, merger, or any major change in ownership. |
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| For anyone who wants to sell their business, or is in the process, the
numbers above may be discouraging. Reliable sources report that approximately
20% of small businesses are for sale at any one time. Only about
20% to 25% of these will actually sell. Even when considering firms that are
considered mid-sized (businesses with sales of $10 to $50 million and 100
to 500 employees) – only 50% will sell. Why are the percentages so low? |
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| Many sellers “test the waters” only to discover that the price they thought
appropriate for their business is not in the ballpark, so they withdraw it from
sale. Other sellers soon realize that they will be unemployed after they sell,
and then change their minds about selling. Still others, who elected to
solve some personal problem, solve it and withdraw their business from
the marketplace. Here are some of the other major reasons: |
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- Sellers overprice their business. It’s only natural to try to get as much
as possible for one’s business. After all, it most likely represents a good
portion of the seller’s net worth, and a good portion of his or her life’s
work. Every business on the market is competing with every other business
for sale. Today’s buyer is educated and usually business-savvy. There is so
much pricing data available that buyers know when a business is overpriced.
- Sellers are not willing to finance a portion of the selling price. Since there
is very little outside financing available, in many cases the seller will be called
upon to assist in the financing. Studies have shown that sellers who are
willing to finance a portion of the purchase price will receive a higher price.
- Sellers must be willing to negotiate. Sellers who really aren’t serious
about selling will try to stand firm - they don’t want to sell badly enough
to see a prospective buyer’s viewpoint. Whether it’s price, terms,
structure of the deal - a seller must be willing to give up something.
- Sellers, too often, listen to well-meaning outside relatives, friends or
advisors, who really don’t have sufficient knowledge of the selling process.
Sellers who won’t use a professional business broker/intermediary are at a
disadvantage. These outside professionals know the marketplace and greatly
assist in finding the right buyer. They are a “value-added” and will more
than justify their fee. The seller who represents himself or herself will
almost never get the price that a business broker professional will obtain.
- Sellers who don’t have all of their records, information and pending issues
up-to-date and readily available will have great difficulty in selling their business.
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| Who Is Today's Business Buyer? |
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| A survey conducted by The California Association of Business
Brokers (CABB) revealed that the average first time business
buyer is a corporate professional in
his or her mid-40s. The survey data also revealed that the youngest
buyer was 24 years old, while the oldest was 68 years old. Other
information reported that
there has been a significant increase in first-time buyers
leveraging $75,000 to $1,000,000 in home equity in order to purchase
a business.
Many of these buyers,
according to the survey, left the corporate world and wanted to
buy their own business to have more control over their destiny – and
ultimately their own retirement savings.
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| Contact us today for more information on today's business buyer! |
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| If
you are considering selling your business in the next six months, we
would welcome the opportunity to discuss this process with you. We can
advise you on the best strategies to follow to ensure that your
business does sell and for the highest price possible. CONTACT
US
TODAY! |
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Selling
your business is our business!
CTXBX, Inc. dba CTX Business Brokers - 8712 South View Rd. Austin TX 78737
- (512) 301-5811 |
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SBA UPDATE
The
SBA approved $16.9 billion in loans and venture-capital financing for
small businesses in fiscal year 2003. Loans totaled 74,169, a 50- year
record and an increase of 29 percent from the previous year. The SBA
approved a 50-year record 67,300 loan guaranties for fiscal year 2003,
a total 30 percent higher than the previous year. Source: “Big Ideas
from Small Business,” The New York Times, May 19, 2004
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Contact
us for more
information on SBA financing |
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HERE IS SOME INTERESTING INFORMATION BASED ON
THE APPROXIMATE 25 MILLION BUSINESS ENTITIES:
- Approximately 54% of all businesses gross less than $25,000 annually
- Approximately 22% of all businesses gross $100,000 or more. After deducting for any
expenses and/or cost of goods, 78%, most likely, do not make a living wage for the owner.
- Only about 5% of all businesses have annual sales or revenues in excess of $1 million.
- Just to take this a bit further, only about 5,500,000 businesses have annual
sales of over $100,000.
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Women In Business
According to Melanie Sabelaus, the
deputy administrator of the Small Business
Administration (SBA), women “are the
economic powerhouse of the 21st century.”
“When it comes to entrepreneurship in job
creation, it is becoming a woman’s world,” Ms.
Sabelaus said. “There are 10.1 million women
in small business in America. Women are
starting businesses at twice the rate of men,and staying in business longer. Women own
close to 40% of all U.S. businesses and are
generating $3.6 trillion in revenue. That’s
more than the G.D.P. of Germany. One in five
Americans goes to work each morning and
works for a woman-owned business."
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