The Dearth of Small Business Data

Posted by: John Tozzi on August 28, 2008

It’s impossible to find good, current, reliable data on small businesses.

The Economic Census, conducted every five years, takes years to crunch the numbers. Data from the 2007 survey won’t start trickling out until March of 2009, and data releases continue through 2011. The Fed used to do a Survey of Small Business Finances about every five years that’s rich with data. In the course of researching this story, I found out they’re not doing it any more, so 2003 is the last one. The SBA Office of Advocacy has some interesting research, but it’s often based on old numbers from the Census or other sources, so it’s less than timely.

This is clearly a problem for me -- reporters want numbers from next year, forget about five years ago. But it's a problem for small business owners too, if there's insufficient data to inform the policy decisions that affect entrepreneurs. The economy looks a bit different today than it did in 2003, so how should we treat five year old information?

I know research is expensive and slow, and attributes of small businesses are tough to measure because many are short-lived. But there's new data on labor every month, new data on housing every month, new data on manufacturing, retail sales, etc. constantly. It's very difficult to get an accurate and timely picture of the small business economy.

One potential (though unlikely) solution: the IRS. It's the one federal agency that collects information from every small business in the US every year. I know it's not their mission, and I know tax returns for any number of reasons can be less than reliable indicators of reality, but it seems like the IRS could be a good starting place. And they do have some good data on their site -- from five years ago.

Are there good sources that I'm missing? Other solutions the government or researchers should try? This clearly isn't the most pressing issue, but I think it warrants a discussion.

Reader Comments

Joan

August 29, 2008 03:28 PM

This study of Schedule C tax returns might interest you:

Pratt, Joanne H. (2006)Impact of Location on Net Income: Comparison of homebased and non-homebased business sole proprietorship tax returns. Office of Advocacy, SBA www.sba.gov/advo/research/rs275tot.pdf

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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