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The Honolulu Advertiser
Posted on: Wednesday, October 23, 2002

One-person businesses increase 2 percent to 16 million

By Genato C. Armas
Associated Press

WASHINGTON — Entrepreneurs feeding Americans' appetites for new skills and information accounted for the biggest segment of the pre-recession increase in the number of small businesses without paid employees, the Census Bureau reported yesterday.

Nonemployer businesses make up 70 percent of all businesses in the country and range from home-based firms to "Mom-and-Pop"-owned retail stores to construction contractors. Many are part-time ventures run by someone who owns more than one business, bureau analyst Jerry Roth said.

The number of businesses without paid employees increased just over 2 percent between 1999 and 2000 to 16.5 million, according to the report. Those businesses brought in over $709 billion, up 6 percent during that period.

The overall growth is typical given the strong economy at the time, said Census Bureau analyst Paul Hanczaryk.

Firms focusing on educational services like teaching vocational skills or a second language had the largest increase in number of businesses, up 7.9 percent, followed by businesses in the information sector at 7.8 percent. That field includes software publishers, broadcasting and telecommunications firms, and data processors.

Businesses in the mining sector had the biggest increase in receipts — up nearly 33 percent in 2000 to $5.2 billion, after declining the previous two years. Most of the gain came from companies specializing in extracting oil out of the earth, experts said.

The number of companies involved in forestry, utility services, and wholesale and retail trade decreased slightly in 2000. No sector had a decrease in revenue.

The increased presence of multipurpose superstores like Wal-Mart led primarily to the retail decline, said Joel Marks, executive director of the American Small Business Alliance.

Still, the overall number of nonemployer small businesses in America has increased 7 percent since 1997, the earliest year for which data is comparable, while receipts increased by 21 percent.

Though small businesses have been hurt by the recession, Marks predicted the overall upward trend would continue.

"Small business people feel like they control their own destiny a little more," he said. "When you work for a corporation, you are at the whim of unseen powers and those outside of your control."

By state, Nevada — the fastest-growing state by population in the country — had the largest increase between 1999 and 2000 in the number of nonemployer firms (up nearly 7 percent) and receipts (up 14 percent).