Small Businesses Play Big Role in Idaho’s Economy

Small businesses are an essential component of the “American Dream” and are often viewed as the backbone of the national economy. Defined as establishments with fewer than 20 employees, Idaho’s small businesses make up the majority of the state’s private employers and support a significant number of jobs statewide. While the success of smaller employers is often cyclical with the business cycle, small businesses have played a significant role in the current economic expansion and will continue to play a critical role in driving the state’s economy forward.

Share of Employers

Data from the U.S. Bureau of Labor Statistics show in the first quarter of 2015, Idaho was home to nearly 45,000 privately owned businesses with fewer than 20 employees, accounting for nearly 90 percent of all private businesses statewide.

small business graph 1The number of small business establishments in Idaho has increased 3.3 percent from the first quarter of 2014, up nearly 1,400 from the previous year.

The share of small businesses in Idaho is roughly 2 percentage points higher compared with the U.S. overall. Small businesses in the U.S. made up a little more than 88 percent of all private establishments in 2015, which was a 2.2 percent increase from the year before.

Impact from Recession

Despite seeing solid growth through the housing boom, the number of small businesses in Idaho began to slide with the recession. From 2009 to 2013, establishments with fewer than 20 employees decreased 7.6 percent, shedding more than 3,600 businesses. Idaho didn’t see positive growth in the number of small businesses until 2014 when the state added around 400 establishments.

small business graph 2Share of Employment

Small businesses in Idaho’s private sector with fewer than 20 employees account for more jobs than any other size-class in the state. Data from the BLS show that in the first quarter of 2015, this class accounted for 34 percent of all private-sector jobs in the state. Businesses employing between 20 and 49 people accounted for the second largest share at 19 percent.

small business graph 3The majority of the jobs held at small business establishments – more than 70 percent through the first three quarters of 2014 according to the U.S. Census Bureau – are concentrated in service-providing industries. Just under 30 percent were in goods-producing industries.

small business graph 4Small businesses also typically provide strong job creation in the state. In the first three quarters of 2014, the U.S. Census Bureau reported these private businesses were responsible for more than 37,000 new hires. Businesses with 20 to 49 employees reported over 15,000 new hires. Combined, these smaller businesses accounted for 41 percent of new hires statewide.

Every year since 1963, the U.S. president announces and dedicates National Small Business Week – May 1-7 in 2016 – calling attention to the critical role small businesses and entrepreneurs play in the economy. Small business and the entrepreneurial spirit have historically and will forever play a key role in driving the economy forward. Organically growing Idaho’s economy from the roots up through development and support of small businesses will lay the foundation for future success and economic stability. Idaho already has a litany of small business success stories that have become drivers in the state’s economy.

For those interested in starting a small business, many organizations statewide and nationally offer funding, support and mentorship for startup companies. Some of these organizations include:, regional economist
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