Creation of New Venture

     Creation of New Venture

The past decade has demonstrated the powerful emergence of entrepreneurial activity in the United States Many statistics illustrated that, during the past ten years, new business incorporations averaged 600,000 per year. Although many of these incorporations may have been sole proprietorship previously, it still demonstrates venture activity, whether it was through start-ups, expansion or development. More specifically, 807,000 new small firms were established in 1995, an all-time record. Small firms constitute more than 90 percent of the entire business population. Approximately 12 million businesses have owners whose principal occupation is owning and operating them. Out of 12 million, approximately 7 million have owners who work for themselves without employing anyone else. Of the 5 million remaining firms, only 15,000 employ 500 or more people.

Three types of establishments have been identified by small business Administration: (1) “small” establishments owned by small enterprises, (2) “apparent small” establishments owned by large establishments, and (3) “large” establishments owned by large enterprises. Small enterprises are defined as having 100 or fewer employees; large enterprises have more than 100 employees. More than half of all businesses employ fewer than 5 people. More significantly, almost 90 percent of firms employ fewer than 20 people. This employment number is important, since all the small entrepreneurial firms have created the most net new jobs in the U.S. economy from 1977 to 1990. In addition, the smallest of our enterprises have created a steady supply of net new jobs over the business cycle from 1977 to 1990.