Federal Reserve Banks of New York, Cleveland, Richmond
First published December 2018
Nonemployer firms are important to the United States’ economy, comprising 81% of all small businesses, employing 17% of the American workforce, and generating $1.2 trillion in annual sales. While previous research has explored why individuals seek self-employment or what conditions drive nonemployers to become employer firms, less is understood about the financial experiences and challenges of nonemployers—namely, whether or not nonemployers are succeeding financially.
The Small Business Credit Survey (SBCS), a national collaboration of the 12 Federal Reserve Banks, provides an opportunity to fill this information gap on nonemployer firms. Fielded in Q3 and Q4 2017, the survey yielded 5,547 responses from nonemployer firms, businesses in the 50 states and the District of Columbia that have no full- or part-time employees. This report provides an in-depth look at these firms’ financial needs, decisions, and outcomes.
The 2017 survey data revealed nonemployer firms are performing positively overall despite notable financial challenges, especially for particular segments of firms. This executive summary highlights the key findings for nonemployer firms overall and for five subgroups of nonemployers.