The Small Business Administration recently released the Ohio Small Business Profile, providing statistics on the small business environment within the state.
With 926,365 small businesses employing 2,074,595 workers, these enterprises employed about half of the state’s private workforce in 2011. Of these small businesses in Ohio, the majority had fewer than 100 employees.
Small businesses help contribute to not only stable, but growing economies. Steve Schoeny, Director of the Department of Development, City of Columbus, sees two major ways that small businesses help Ohio. First, they provide a large base of employment, but also serve as a creative ground for new ideas and new entrepreneurs.
The mindset is also shifting about entrepreneurship. “Studies have shown that entrepreneurship is something that has really grown and can almost be passed down culturally,” Schoeny says. A culture of entrepreneurship can be embedded in regions to families.
Small businesses created almost 45,000 net new jobs in 2011. The biggest gain was in firms with one to four people, with an increase in the number of people who were self-employed in 2012.
Schoeny points out how the economic structure in the U.S. over the past few years has led to this entrepreneurial rise.
“Anytime you come out of a recession you’re going to see people who have been somehow displaced,” Schoeny says. This displacement pushes people to do what they have always wanted, or always should have been doing. Also, with a dynamic economy dominated by knowledge-based businesses like healthcare, information technology, finance and insurance, individuals have ample opportunity to jump out on their own. Strong corporate structures actually help give rise to smaller, main street-type businesses.
As the economy redevelops, “They provide an opportunity for people to really innovate for themselves,” Schoeny says. Innovation within companies big or small is what really drives growth.
Ohio sees the most small businesses in healthcare & social assistance, manufacturing and accommodation & food service.
An aging population across the U.S. is leading to more opportunities in healthcare. Schoeny notes the world-class healthcare facilities across the state of Ohio – The Ohio State University Wexner Medical Center, The Cleveland Clinic, Nationwide Children’s Hospital, Cincinnati Children’s Hospital – and how these large healthcare institutions build innovation.
Manufacturing has a long tradition in Ohio. Large manufacturers like Honda, GE Aviation and Timken are served by a host of smaller suppliers. Supplier network systems are yielding small business manufacturing companies.
The high number of accommodation & food service small businesses is a good sign for the economy in itself. “Seeing that growth is part of having a growing economy where people are starting to have disposable income again,” Schoeny says. When people feel as though they are doing better, they are more likely to spend money on activities like going out to eat or travelling.
While Ohio does have a strong small business environment, the state falls behind the national average on women-owned businesses, 6.2 percent versus 7.7 percent, and minority-owned business, 5.1 percent to 7.5 percent. To bridge this gap, Schoeny says communities can continue with efforts that are already in place to educate women and minorities about what it means to start a small business, while providing the resources and mentoring opportunities to make it possible. Locally, the Columbus Chamber of Commerce Diversity Bridge program is one such resource, providing services to help develop women and minority-owned businesses.
Focusing on what’s happening locally, “Right now is a very exciting time in the small business environment in Columbus,” Schoeny says. The city is displaying a creative energy and openness to new ideas. And with new ideas sometimes comes failures – one thing that Columbus has been slow to adopt. Schoeny sites the coasts lack of stigma on trying and failing, and notes the importance of using failures as a chance to figure out what to do differently the next time around. But overall, Schoeny is sensing a cultural shift that’s much more celebrating of creativity, exciting him for the future of small businesses in Columbus.
For the SBA’s full report, click here (PDF).
