Half of U.S. Businesses Operated from the Home

When we think of a business, we often conjure up an image of an office park or perhaps a storefront in a strip mall. But in reality, according to new data on firms that responded to the 2007 Survey of Business Owners (SBO), slightly more than half of U.S. businesses — 51.6 percent — were home-based. Only 6.9 percent of these home-based respondent businesses had $250,000 or more in sales and receipts, while 57.1 percent brought in less than $25,000.

The SBO provides a wealth of national-level data on the characteristics of businesses and their owners. It looks at topics like the age and educational levels of owners, types of customers and workers, and sources of financing for start-up and expansion. For instance, 58.2 percent of women-owned respondent firms were home-based. And the majority of the Hispanic-owned respondent businesses (56.1 percent) were able to conduct transactions in Spanish; the same was true of only 7.4 percent of all U.S. respondent firms.

Another interesting aspect of the SBO data is that capital commitments were modest. For budding entrepreneurs, the initial investment is often rather small, as roughly three in 10 (30.6 percent) respondent firms requiring start-up capital needed less than $5,000. Instances of massive amounts of start-up capital are relatively rare, as only 1.5 percent of these firms required $1 million or more. Believe it or not, one in 10 (10.4 percent) were actually started with a credit card — although they may have also used other sources of capital.

Here are a couple of more notable points. First, the “little guy” is important to most business owners. In 2007, 72.7 percent of the nation’s businesses reported that individual customers accounted for at least 10 percent of their total sales of goods and services. And secondly, the dreams of immigrating to the United States and then starting or acquiring a business have become a reality for many, as 13.6 percent of owners reported they were born outside the United States.

Please visit the Census Bureau Web site at www.census.gov for more information on the characteristics of businesses and their owners.