Dawn Rivers Baker, editor and publisher of The MicroEnterprise Journal, recently emailed me a great comment on my recent post on microbusiness. Dawn wrote:
Hi Christine,
I was originally going to post this as a comment on your blog but it wound up being so long that I decided to email you instead.
Yes, getting good numbers on microbusinesses is a pain in the keester. The National Federation of Independent Business is the source that many people look to for information about small businesses but their data is slightly flawed. They survey their own membership for their data. That's problematic because, even though the majority of the organization's membership is composed of microbusinesses, those micros have higher average annual revenues that the overall microbusiness population.
Then, too, the NFIB is clearly a pro-Republican organization, regardless of what they say about their non-partisanship. Microbusiness owners as a group, on the other hand, probably more closely reflect the public at large in terms of their political views. That is particularly true in light of the way the demographics of small business ownership have been changing over the last ten years or so. Given all that, their membership is "meaningfully different" (as one university statistics professor put it to me) from the general population of microbusiness owners and they probably don't speak for the majority of small business owners.
On a more general note, most small business surveys don't weight their results to account for the fact that 90% of all U.S. firms are microbusinesses (as you and I both define them). That is going to make a difference to the results.
Is anybody doing this research? No. At least, not yet. The National Association for the Self-Employed has started regularly surveying their members, and the views expressed are probably as close as you're going to get -- except for the fact that they are conducting non-scientific, web-based surveys that are not exactly worded carefully to ensure the results are not biased.
As for your last question -- without specific research, I'm guessing here but the numbers say that micros don't especially want to grow their organizations (although they are perfectly willing to grow their revenues). The most recent firm size class data released by the SBA Office of Advocacy and the Census Bureau indicate that, in 2002, all the growth in the number of U.S. firms was microbusinesses. All of it. The numbers of non-micro small business and of large businesses actually shrank between 2001 and 2002. In fact, if you look over the long haul, microbusinesses as a percentage of the number of all U.S. firms has been steadily growing for about a decade, while the number of non-micro small businesses has been declining and large firms are more or less holding steady. As the director of economic research at Advocacy put it to me, "The middle is shrinking."
What that says to me is that there are a lot of micros out there who are finding that they can make enough money to enable them to live the life they like without having to saddle themselves with a larger organization than they feel comfortable with. Then, too, I believe most microbusiness owners avoid doing things with their businesses that will move them from being producers to being administrators.
I recently wrote a white paper that covers this topic and more, called The Microbusiness Way of Growth: how microbusinesses substitute operational efficiency for scale and sacrifice organizational growth for revenue growth...
My thanks to Dawn for taking the time to write down this great information. Those of you who are microbusinesses yourselves, or who consult or sell to them, will find Dawn's newsletter and blog a great informative source.
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