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According to the U.S. Small Business Administration, more than one-half million businesses started (employer births) each year between 1990 and 2003. In the years between 1990 and 2003, the highest number of business starts in one year occurred in 1996, with 597,792; the lowest number for one year occurred in 1991 (541,141). The estimated number of employer births during 2003 was 572,900. The total number of employer firms has been increasing each year since 1992. In 2003 there were an estimated 5.7 million employer firms. (See Table 9.1.)

The annual rate of business starts varies from state to state. Table 9.2 provides a state-by-state listing of the number of "employer firm" business starts in select years between 1990 and 2003. These constitute businesses that employ one or more workers. In 2003, when the number of employer firm births declined by 2.8%, the state with the most employer firm business starts was California, with 113,500 business start-ups. The next state was Florida, with 69,711 business start-ups in 2003. However, the 2003 figure for California actually represented a 13.3% decline from the 130,840 business start-ups in 2002. As well, the Florida statistic represented a decline of 4.1% in 2003, from 72,720 in 2002. (See Table 9.2.)

The state with the highest year-to-year increase in 2003 business starts was Arkansas, with an increase of

TABLE 9.1 U.S. business measures, 1980–2003 "Table 3. U.S. Business Measures, 1980–2003," in Small Business Economic Indicators for 2003, U.S. Small Business Administration, Office of Advocacy, August 2004, http://www.sba.gov/advo/stats/sbei03.pdf (accessed January 8, 2006)

TABLE 9.1
U.S. business measures, 1980–2003
Year Real gross domestic product (billions 2000$) Employer firms Establishmentsa Self employment (thousands) Self employment rate (%) Business tax returns Nonfarm sole proprietors Employer births Employer terminations Business bankruptcies
aUnits with paid employees in the fourth quarter through 1983. 1984 on includes units active in any quarter of the year.
bEstimate.
Note: NA = not available.
SOURCE: "Table 3. U.S. Business Measures, 1980–2003," in Small Business Economic Indicators for 2003, U.S. Small Business Administration, Office of Advocacy, August 2004, http://www.sba.gov/advo/stats/sbei03.pdf (accessed January 8, 2006)
2003 10,398 5,696,600b NA 10,295 7.0 26,915,900 18,684,200 572,900b 554,800b 35,037
2002 10,083 5,678,500b NA 9,926 6.9 26,347,100 18,336,500 589,700b 569,000b 38,540
2001 9,867 5,657,774 7,095,302 10,109 7.0 25,631,200 17,904,900 585,140 553,291 40,099
2000 9,817 5,652,544 7,070,048 10,215 7.2 25,106,900 17,570,500 574,300 542,831 35,472
1999 9,470 5,607,743 7,008,444 10,087 7.2 24,750,100 17,377,100 579,609 544,487 37,884
1998 9,067 5,579,177 6,941,822 10,303 7.5 24,285,900 17,183,700 589,982 540,601 44,367
1997 8,704 5,541,918 6,894,869 10,513 7.7 23,857,100 17,176,000 590,644 530,003 54,027
1996 8,329 5,478,047 6,738,476 10,489 7.8 23,115,300 16,955,000 597,792 512,402 53,549
1995 8,032 5,369,068 6,612,721 10,482 7.9 22,555,200 16,424,000 594,369 497,246 51,959
1994 7,836 5,276,964 6,509,065 10,648 8.1 22,191,000 16,154,000 570,587 503,563 52,374
1993 7,533 5,193,642 6,401,233 10,279 8.0 20,874,796 15,848,000 564,504 492,651 62,304
1992 7,337 5,095,356 6,319,300 9,960 7.8 20,476,775 15,495,000 544,596 521,606 70,643
1991 7,101 5,051,025 6,200,859 10,274 8.1 20,498,855 15,181,000 541,141 546,518 71,549
1990 7,113 5,073,795 6,175,559 10,097 8.0 20,219,400 14,783,000 584,892 531,400 64,853
1989 6,981 5,021,315 6,106,922 10,008 8.1 19,560,700 14,298,000      NA      NA 62,449
1988 6,743 4,954,645 6,016,367 9,917 8.2 18,619,400 13,679,000      NA      NA 62,845
1987 6,475         NA 5,937,061 9,624 8.0 18,351,400 13,091,000      NA      NA 81,463
1986 6,264         NA 5,806,973 9,328 7.9 17,524,600 12,394,000      NA      NA 79,926
1985 6,054         NA 5,701,485 9,269 8.0 16,959,900 11,929,000      NA      NA 70,644
1984 5,814         NA 5,517,715 9,338 8.2 16,077,000 11,262,000      NA      NA 64,211
1983 5,424         NA 5,306,787 9,140 8.2 15,245,000 10,704,000      NA      NA 62,412
1982 5,189         NA 4,633,960 8,898 8.1 14,546,000 10,106,000      NA      NA 69,242
1981 5,292         NA 4,586,510 8,735 8.0 13,858,000 9,585,000      NA      NA 48,086
1980 5,162         NA 4,543,167 8,642 8.1 13,021,600 8,932,000      NA      NA 43,252

TABLE 9.2 Employer firm births by state, selected years 1990–2003 "Table 7. Employer Firm Births by State, 1990–2003 (Selected Years)," in Small Business Economic Indicators for 2003, U.S. Small Business Administration, Office of Advocacy, August 2004, http://www.sba.gov/advo/stats/sbei03.pdf (accessed January 8, 2006)

TABLE 9.2
Employer firm births by state, selected years 1990–2003
State 1900 1995 2000 2001 2002 2003 Annual percent change Rank
*Estimate.
Notes: Self-employment presented here represents individuals whose primary occupation is self-employment and they may or may not have employees. Note that some businesses file more than one tax return. Births for 2002 and 2003 are estimated from 2001 data from the Bureau of the Census, yearly percent changes in similar data provided by the Department of Labor, Employment and Training Administration and rounded. Births are from prior year's March through current year's March. Employer firm estimates are the previous year figure plus the difference between birth and termination estimates.
SOURCE: "Table 7. Employer Firm Births by State, 1990–2003 (Selected Years)," in Small Business Economic Indicators for 2003, U.S. Small Business Administration, Office of Advocacy, August 2004, http://www.sba.gov/advo/stats/sbei03.pdf (accessed January 8, 2006)
    U.S. total 584,892 594,369 574,300 585,140 589,700* 572,900*
    Yearly change (%)    (0.9) 1.9     0.8    (2.8)
    Opening rate (%)    10.2 10.4    10.4    10.1
Alabama 9,260 9,140  10,067 10,060   9,534   9,014  (5.5) 44
Alaska 2,688 2,521   2,333 2,438   2,270   2,441   7.5 7
Arizona 9,832 12,044  15,175 14,541  14,291  13,322  (6.8) 45
Arkansas 6,484 7,042   4,680 3,990   5,381   7,253  34.8 1
California 139,146 127,074 167,047 128,885 130,840 113,500 (13.3) 50
Colorado 11,962 19,703  25,462 24,730  25,290  22,400 (11.4) 49
Connecticut 9,399 9,395   9,910 9,074   8,726   8,501  (2.6) 36
Delaware 2,083 2,783   3,682 3,352   3,223   3,439   6.7 10
District of Columbia 3,226 3,250   4,472 4,090   4,157   4,052  (2.5) 35
Florida 48,391 54,006  59,912 60,370  72,720  69,711  (4.1) 41
Georgia 22,309 24,478  28,925 23,211  28,756  24,217 (15.8) 51
Hawaii 3,585 3,874   3,745 3,811   3,555   3,658   2.9 18
Idaho 3,853 5,053   5,829 5,534   5,039   5,998  19.0 3
Illinois 27,952 30,393  28,875 28,426  27,342  28,933   5.8 12
Indiana 10,993 14,355  14,112 13,903  13,530  13,452  (0.6) 26
Iowa 5,526 6,103   5,668 5,659   5,660   5,534  (2.2) 30
Kansas 6,716 7,600   6,483 7,026   6,703   7,625  13.8 4
Kentucky 7,730 9,078   8,637 8,713   8,526   8,155  (4.4) 42
Louisiana 8,321 9,817  10,468 9,816   9,810   9,298  (5.2) 43
Maine 3,978 4,476   5,135 4,667   4,428   4,033  (8.9) 46
Maryland 18,923 18,458  20,539 20,072  20,576  20,687   0.5 25
Massachusetts 14,697 16,040  18,640 18,166  21,262  18,984 (10.7) 48
Michigan 16,804 23,972  23,760 23,060  22,799  22,022  (3.4) 37
Minnesota 11,525 12,178  13,906 12,700  13,683  14,652   7.1 9
Mississippi 5,620 6,185   6,439 6,164   6,256   6,020  (3.8) 39
Missouri 13,336 14,935  13,996 14,360  16,337  15,947  (2.4) 33
Montana 2,295 3,377   4,418 3,608   3,569   4,548  27.4 2
Nebraska 4,143 3,895   4,441 4,419   4,372   4,311  (1.4) 28
Nevada 4,934 7,151   8,587 8,864   8,826   9,749  10.5 6
New Hampshire 4,278 4,988   4,677 4,398   4,562   4,653   2.0 21
New Jersey 24,610 27,106  27,885* 36,747  29,916  29,236  (2.3) 32
New Mexico 4,721 4,837   5,836 5,753   5,281   5,508   4.3 16
New York 54,781 54,620  61,507 62,730  59,571  60,569   1.7 23
North Carolina 19,652 21,650  23,310 22,436  22,950  22,465  (2.1) 29
North Dakota 1,392 1,631   1,493 1,419   1,356   1,456   7.4 8
Ohio 20,286 27,046  22,290 22,951  22,379  22,227  (0.7) 27
Oklahoma 8,069 8,790   8,979 9,940   8,702   8,802   1.1 24
Oregon 15,504 13,770  14,729 13,246  13,160  13,842   5.2 13
Pennsylvania 26,125 23,820  35,104 33,497  31,939  31,214  (2.3) 31
Rhode Island 2,900 3,290   3,675 3,547   3,397   3,465   2.0 20
South Carolina 9,913 10,447  11,114 11,372  10,266  10,759   4.8 14
South Dakota 2,026 1,858   2,138 1,953   1,389   1,338  (3.7) 38
Tennessee 17,297 15,823  15,793 16,488  15,982  17,700  10.7 5
Texas 49,419 52,871  54,330 53,271  54,009  52,677  (2.5) 34
Utah 4,662 7,742   9,875 10,745  10,431  10,656   2.2 19
Vermont 2,183 2,139   2,511 2,226   2,331   2,122  (9.0) 47
Virginia 19,856 19,433  22,219 21,371  21,438  22,069   2.9 17
Washington 29,322 30,243  40,357 39,641  37,562  36,136  (3.8) 40
West Virginia 4,231 4,425   4,177 3,691   3,944   4,126   4.6 15
Wisconsin 10,307 12,342  12,436 12,025  12,172  12,400   1.9 22
Wyoming 1,879 2,230   2,314 2,558   2,275   2,419   6.3 11

34.8%, from 5,381 in 2002 to 7,253 in 2003. This increase followed another large increase (34.9%) from 2001 to 2002. Other states registering high increases in 2003 include Montana (27.4%) and Idaho (19%). (See Table 9.2.)

Georgia, which recorded a 23.9% increase in business start-ups from 2001 to 2002, experienced a 15.8% decline in start-ups in 2003 (from 28,756 in 2002 to 24,217 in 2003). Besides Georgia and California (as noted above), other states experiencing significant decreases were Colorado (11.4%) and Massachusetts (10.7%). (See Table 9.2.)

Reasons for Becoming a Business Owner

In the Characteristics of Business Owners Survey, conducted by the U.S. Census Bureau in 1992, business owners were queried on the reasons for embarking on their own business venture. These particular statistics were not updated in the 1997 survey and, as of January 2006, have not been included in reports released for 2002 data. The survey revealed that one-fifth (21.3%) of business owners reported that they became an owner to have a primary source of income, while one-fourth (25.6%) wanted to have a secondary source of income. Another one-fifth (21.5%) wanted to be their own boss. Less than 3% wanted to bring a new idea to the marketplace. Approximately 8% wanted to have more freedom to meet family responsibilities.

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