National Small Business Week, which begins May 16, is a time to reflect on the importance of small-business owners in the North Dakota economy.

“Many claims have been made about small businesses and about the entrepreneurial nature of North Dakota,” says Glenn Muske, rural and agribusiness enterprise development specialist for the North Dakota State University Extension Service. “In general, these statements are correct. Small businesses mean strong local economies. They are a major source of new jobs within an economy. And North Dakota continues to see more new small businesses start each year.”

According to the U.S. Small Business Administration, North Dakota has more than 17,000 small businesses, or those with fewer than 500 employees. This number represents more than 96 percent of the employers in the state. More than 85 percent of North Dakota businesses employ fewer than 20 employees and 55 percent have four or fewer employees. The total employment numbers for this segment represent more than 60 percent of the private-sector workforce.

“These numbers, though, do not capture the 46,000 nonemployers, or nearly 32,000 farmers and ranchers, who operate a business in every sense of the word in my mind,” says Muske. “Thus, the numbers are really much larger for small businesses than what is reported.”

In terms of job development, the Kaufmann Foundation in Kansas City, Mo., focusing on entrepreneurship and small businesses, noted that young firms, from one to five years old, generated nearly two-thirds of the job growth. The majority of that growth, more than 80 percent, comes from firms still in existence at the end of that five-year period.

“These statistics should encourage communities to work on not only helping businesses get started but then to do what they can do to ensure those businesses succeed,” says Muske. “Communities are always looking for new growth businesses. In many cases, those businesses are those owners already in business or thinking about going into business who live in the community. We do not know what will be the next big growth opportunity. Thus, support needs to be across the board with the thought that one or two businesses will be a home run.”

Based on U.S. Bureau of Labor Statistics, North Dakota had more than 1,700 private-sector firms with employees start during the most recently reported year, 2008. These numbers, based on national trends, have increased since then.

“With these types of numbers, we easily can understand why small businesses are considered the ‘backbone’ of the economy, whether in the local community, the state or the nation,” Muske says. “Therefore, supporting and encouraging those who wish to start a business and those who already own a small business is crucial to strengthen and continue economic progress.”

The NDSU Extension Service has resources to help business owners understand their business priorities. More small-business information is online at http://www.ag.ndsu.edu/smallbusiness/. Visit the site to register for a regular small-business newsletter.

eXtension, an educational partnership of 74 universities, including NDSU, is another resource. It provides objective and research-based information and learning opportunities to help people improve their lives. Visit http://www.extension.org/entrepreneurship.

Entrepreneurs and communities also can find help through several other sources, including the U.S. Small Business Administration, North Dakota Small Business Development Centers, North Dakota SCORE (Service Corps of Retired Executives) chapters, colleges and universities, local economic development associations and entrepreneurial centers.

NDSU Agriculture Communication - May 10, 2011