Small Business in South Carolina Caron St John

Small Business in South Carolina Caron St. John, Ph. D Clemson University

Purpose • Small business in the US economy • Small business in SC • Small business and innovation • Technology-based SC companies

Small Business • Definition: U. S. government defines a small business as any company with fewer than 500 employees • There are 24. 7 million businesses in the US • Of those, 5. 7 million have employees; 18. 6 million do not • Only 17, 000 businesses in the US have more than 500 employees • 99. 7% of all employer- firms are “small” • Small firms employ over 50% of the private sector workforce, pay 45 percent of total private payroll.

Firms in the United States

Small Business in South Carolina… • Number of firms that employ others increased from 70, 600 in 1990 to 91, 000 in 2003 • In 2002 -2003, SC ranked 13 th in the nation on growth in number of employerfirms • In 2002 -2003, SC ranked 24 th nationwide in rate of new employer-firm formation, 39 th in terminations. • In 2002 -2003, self-employment grew from 108, 000 to 120, 000, which ranks 11 th in the nation. Source: US SBA: Small Business Economic Indicators, 2003

Firms and Employment in South Carolina (By Employment Size of Firm) Total Firms Employees 77, 996 1, 596, 385 0 -19 66, 900 264, 144 <500 75, 789 745, 967 500+ 2, 207 850, 418

Number of SC Firms, by Size

New firms and job growth… Between 1990 and 2000, the U. S. economy created approximately 15 million new jobs. – Over 1/3 were created by ~ 6. 4 million new firms formed during those same years. – Together, on average, year after year, new and expanding small firms accounted for over 75% of all new job creation in the country. In 2000 -2001, small business created ALL net new jobs: 1. 1 million. Large employers had net job loss of over 150, 000. Sources: Small Business Economic Indicators 2000, U. S. Small Business Administration Office of Advocacy, 2001: Global Entrepreneurship Monitor, 2000

Small Firms and Innovation

Innovation and small firms Small technical firms, on average: • Produce 13 -14 times more patents per employee than large patenting firms • Patent more technically significant inventions than larger firms, – These patents are twice as likely as large firm patents to be among the 1% most cited. • Participate in innovations that are more leading edge – early stage • Play an essential role in advancing new technologies in the economy Source: CHI Research Inc. , (February, 2003) “Small Serial Innovators: The Small Firm Contribution to Technical Change. ” Small Business Administration Office of Advocacy

Lead in bringing innovations to market… • Small entrepreneurial ventures responsible for – more than 67% of inventions and – 95% of all radical innovations. . since WWII • Examples – Air conditioning, airplane, artificial skin, frozen foods, heart valve, heat sensor, helicopter, hydraulic brake, personal computer, safety razor, soft contact lens….

Technology Companies in South Carolina -- 2005 Corptech Directory of High Technology Companies, 2005

SBIR and STTR Awards 97 98 99 00 01 02 8 1. 3 45 10 1. 2 37 8 1. 7 42 19 3. 8 35 20 4. 8 30 25 6. 2 32 3. 8 20 4. 8 26 SBIR Awards Dollars Rank STTR Awards Dollars Rank

SBIR Awards in South Carolina

Summary • Small firms critical to growth and innovation in the economy • SC has strong record of new firm creation and small business growth • Firms in key technology areas • Increased participation by small technology firms in federal funding programs