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California small business profile

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This SmalBusiness.com Local Project entry provides a overview of small business activities in California. You can find information about a wide array of small business resources in California at the California Hub.

California Small Business Profile - Small businesses are vital to the financial wellbeing of the state’s economy. Their contribution is essential for economic growth since they make up almost all employer firms in the state. As entrepreneurs and innovators, small business owners represented a diverse group in 2004 and continued to keep the state’s economy productive. This Small Business Profile was prepared by the U.S. Small Business Administration and provides information on the performance of small businesses in the state using the most current federal data available.

Number of businesses

There were an estimated 3,320,977 small businesses in California in 2004. Of the 1,077,390 firms with employees, an estimated 99.2 percent, or 1,068,602, were small firms. In 2004, the estimated number of employer businesses increased by 1.3 percent. The number of self-employed persons (including incorporated) increased overall by 7.6 percent, from 1,986,534 in 2003 to 2,137,841 in 2004. Non-employer businesses numbered 2,252,375 in 2002, an increase of 4.8 percent since 2001, based on the most recent data available.
(Sources: U.S. Dept. of Labor, Employment and Training Administration; U.S. Dept. of Commerce, Census Bureau; U.S. Dept of Labor, Bureau of Labor Statistics.)

Women-owned businesses

In 2002 women-owned firms totaled 871,617, an increase of 24 percent from 1997, and generated $140.9 billion in revenues. Firms owned jointly by women and men numbered 346,097 with revenues of $128.2 billion. Women represented 34.7 percent of the selfemployed persons in the state.
(Sources: U.S. Dept. of Labor, Bureau of Labor Statistics; U.S. Dept. of Commerce, Census Bureau.)

Minority-Owned Businesses

In 2002, Hispanic-owned firms numbered 427,805, an increase of 27 percent from 1997. Black-owned firms numbered 113,003, an increase of 43 percent; Asian-owned firms numbered 372,221, an increase of 19 percent; American Indian and Alaska Nativeowned firms numbered 40,541, an increase of 52 percent; and there were 7,308 Native Hawaiian and other Pacific Island-owned businesses.
(Source: U.S. Dept. of Commerce, Census Bureau.)

Business turnover

There were an estimated 117,016 newemployer businesses in 2004, 3.1 percent more than theprevious year. Business terminations numbered 143,115 in2004, an increase of 1.9 percent. Business bankruptciesdecreased by 16.7 percent and totaled 3,748 in 2004.
(Sources:U.S. Dept. of Labor, Employment and Training Administration; Administrative Office of the U.S. Courts; U.S. Dept. of Commerce, Census Bureau.)


Small firms with fewer than 500 employeesnumbered 669,132 in 2002 and employed 6,810,807individuals, or 53 percent of the state’s non-farm privatesector (Table 1).3 Net job gains among firms with fewer than20 employees totaled 117,379, while large firms with 500 ormore employees lost 263,913 jobs between 2001 and 2002.
(Source: U.S. Dept. of Commerce, Census Bureau, Statistics of U.S. Businesses.)

Small Business Income

Non-farm proprietors’ income, apartial measure of small business income, increased by 6percent, from $129.7 billion in 2002 to $137.5 billion in 2003.
(Source: U.S. Dept. of Commerce.)


Commercial bank lenders are an important sourceof small business loans, and small firms usually rely on them for financing. Over the last 10 years the number of banks in California has declined. The Office of Advocacy hasidentified banks in each state that make the most loans to small businesses. This information is available in its banking studies at http://www.sba.gov/advo/research/lending.html.

See also


Small Business Administration