Survey of Business Owners (SBO)

Survey of Business Owners - Characteristics of Business Owners: 2007

SCOPE OF THIS REPORT

The Characteristics of Business Owners: 2007 is the only report in the U.S. Census Bureau's 2007 Survey of Business Owners (SBO) publication series to provide data on selected economic and demographic characteristics of the owners of U.S. respondent firms. Data aggregates are presented by gender, ethnicity, race, and veteran status of business owners at the national level by 2007 North American Industry Classification System (NAICS).

Additional statistics for the owners of both employer and nonemployer respondent firms are provided for the following:

• How the owner initially acquired ownership of the business
• When the owner acquired ownership of the business
• The owner's primary function in the business
• Average number of hours the owner spent managing or working in the business
• Whether the business provided the owner's primary source of income
• Whether the owner had previously ever owned a business or been self-employed
• The owner's education level prior to the owner establishing, purchasing, or acquiring the business
• Age of owner
• Whether the owner was born in the United States

These data come from the 2007 SBO and were collected as part of the 2007 Economic Census. The SBO includes a sample of more than 2.3 million nonfarm businesses filing 2007 tax forms as individual proprietorships, partnerships, or any type of corporation, and with receipts of $1,000 or more.

Business owners were asked to report the characteristics of up to four individuals with the largest share of ownership; no information was collected for any additional owners regarding characteristics. Respondents provided data on the selected economic and demographic characteristics of an estimated 20.4 million business owners, 6.0 million (29.8 percent) of whom were owners of employer firms and 14.3 million (70.2 percent) of whom were owners of nonemployer firms.

Each owner is classified by:

• Gender: Male or female
• Ethnicity: Hispanic or non-Hispanic
• Race: White; Black or African American; American Indian or Alaska Native; Asian; Native Hawaiian or Other Pacific Islander; or Some Other Race
• Veteran status: Veteran or nonveteran
• Minority status: Minority or nonminority

GENDER, ETHNICITY, RACE, AND VETERAN STATUS OF OWNERS OF SBO RESPONDENT BUSINESSES

Table A [xls, 32K] shows the percent of business ownership by detailed groups for all 20.4 million owners of respondent businesses. Detail may not add to total because a Hispanic owner may be of any race. Moreover, each owner had the option of selecting more than one race and therefore is included in each race selected.

PRIMARY FUNCTION OF OWNERS IN THEIR BUSINESS

In 2007, 60.5 percent of owners of firms that responded to the survey reported that producing goods and/or providing services was their primary function in the business (53.7 percent of owners of employer respondent firms and 63.4 percent of owners of nonemployer respondent firms); 46.9 percent of owners reported that the day-to-day management of their business was their primary function (58.2 percent of owners of employer respondent firms and 42.1 percent of owners of nonemployer respondent firms); 39.8 percent of owners of respondent firms indicated that the financial control of their business was their primary function (52.1 percent of owners of employer respondent firms and 34.5 percent of owners of nonemployer respondent firms); and 14.9 percent of owners reported that none of the above listed activities was their primary function (11.6 percent of owners of employer respondent firms and 16.3 percent of owners of nonemployer respondent firms). Note: Respondents could check more than one item as their primary function.

Approximately 57.2 percent of women owners of respondent firms and 62.5 percent of men owners of respondent firms reported that producing goods and/or providing services was their primary function in the business; 41.1 percent of women owners and 50.4 percent of men owners of respondent firms reported that the day-to-day management of their business was their primary function; 35.6 percent of women owners and 42.3 percent of men owners of respondent firms reported that the financial control of their business was their primary function; and 19.7 percent of women owners and 12.0 percent of men owners of respondent firms indicated that none of the above listed activities was their primary function.

In 2007, 60.4 percent of minority owners of respondent firms and 60.5 percent of nonminority owners of respondent firms reported that producing goods and/or providing services was their primary function in the business; 43.4 percent of minority owners and 47.5 percent of nonminority owners of respondent firms reported that the day-to-day management of their business was their primary function; 30.9 percent of minority owners and 41.4 percent of nonminority owners of respondent firms reported that the financial control of their business was their primary function; and 15.8 percent of minority owners and 14.7 percent of nonminority owners of respondent firms indicated that none of the above listed activities was their primary function.

HOURS WORKED PER WEEK

In 2007, more than 4 in 10 (42.9 percent) owners of respondent firms reported working an average of 40 hours or more per week in their business. This included 62.9 percent of owners of employer respondent firms and 34.3 percent of owners of nonemployer respondent firms. Approximately 16.1 percent of owners of respondent firms (13.1 percent of owners of employer respondent firms and 17.4 percent of owners of nonemployer respondent firms) reported working an average of 20 to 39 hours per week in their business. About 1 in 3 (30.1 percent) owners of respondent firms (14.5 percent of owners of employer respondent firms and 36.7 percent of owners of nonemployer respondent firms) reported working an average of less than 20 hours per week in their business. Slightly more than 1 in 10 (10.9 percent) owners of respondent firms (9.5 percent of owners of employer respondent firms and 11.6 percent of owners of nonemployer respondent firms) reported working no hours in their business.

Approximately one-third (30.5 percent) of women owners and one-half (50.3 percent) of men owners of respondent firms reported working an average of 40 hours or more per week in their business; 19.6 percent of women owners of respondent firms and 14.0 percent of men owners of respondent firms reported working an average of 20 to 39 hours per week in their business; more than one-third (36.0 percent) of women owners and about one-quarter (26.5 percent) of men owners of respondent firms reported working an average of less than 20 hours per week in their business; and 13.9 percent of women owners and 9.2 percent of men owners of respondent firms reported working no hours in their business.

In 2007, 47.1 percent of minority owners of respondent firms and 42.1 percent of nonminority owners of respondent firms reported working an average of 40 hours or more per week in their business; 16.9 percent of minority owners and 16.0 percent of nonminority owners of respondent firms reported working an average of 20 to 39 hours per week in their business; 26.3 percent of minority owners and 30.7 percent of nonminority owners of respondent firms reported working an average of less than 20 hours per week in their business; and 9.7 percent of minority owners and 11.2 percent of nonminority owners of respondent firms reported working no hours in their business.

PRIMARY SOURCE OF INCOME

About one-half (50.5 percent) of the owners of respondent firms reported that their business was their primary source of income in 2007. This was true for 68.6 percent of owners of employer respondent firms and 42.8 percent of owners of nonemployer respondent firms.

Approximately 44.7 percent of women owners of respondent firms and 54.0 percent of men owners of respondent firms reported that their business was the primary source of income in 2007.

Over half (54.4 percent) of minority owners of respondent firms and almost half (49.8 percent) of nonminority owners of respondent firms reported that their business was their primary source of income in 2007.

PREVIOUS BUSINESS OWNERSHIP OR SELF-EMPLOYMENT

In 2007, more than one-third (36.7 percent) of owners of respondent firms reported that they had owned another business or were self-employed at some point prior to owning their current business. This included 39.1 percent of owners of employer respondent firms and 35.7 percent of owners of nonemployer respondent firms.

Approximately 28.0 percent of female owners of respondent firms and 42.0 percent of male owners of respondent firms reported having previously owned a business or been self-employed. The comparable numbers for minority and nonminority owners of respondent firms were 32.2 percent and 37.5 percent respectively.

EDUCATIONAL BACKGROUND

In 2007, more than two-thirds (67.8 percent) of owners of respondent firms reported completing at least some college education at the time that they started or acquired their business. Approximately 5.2 percent of owners of respondent firms reported that they completed less than a high school education (3.6 percent of owners of employer respondent firms and 5.9 percent of owners of nonemployer respondent firms), and 20.6 percent of owners had earned a high school diploma or GED before starting or acquiring their business (20.8 percent of owners of respondent employer firms and 20.5 percent of owners of nonemployer respondent firms). In addition, 6.3 percent of owners of respondent firms had completed technical, trade, or vocational school (5.4 percent of owners of employer respondent firms and 6.7 percent of owners of nonemployer respondent firms). Approximately 17.0 percent of owners of respondent firms had completed some college without obtaining a degree (16.4 percent of owners of employer respondent firms and 17.3 percent of owners of nonemployer respondent firms) and 5.9 percent of owners of respondent firms had obtained an associate's degree (5.5 percent of owners of employer respondent firms and 6.1 percent of owners of nonemployer respondent firms). Over one-quarter (26.4 percent) of owners of respondent firms reported having achieved a bachelor's degree (27.8 percent of owners of employer respondent firms and 25.8 percent of owners of nonemployer respondent firms) and 18.5 percent of owners of respondent firms had earned a master's, doctorate, or professional degree before starting or acquiring their business (20.4 percent of owners of employer respondent firms and 17.7 percent of owners of nonemployer respondent firms).

More than two-thirds of women and men owners of respondent firms reported completing at least some college education at the time that they established their business (67.7 percent and 67.9 percent respectively). About one-quarter of both women and men owners of respondent firms had earned a high school diploma or GED or completed less than a high school education when they established their business (25.3 percent and 26.1 percent respectively). About one-quarter of both women and men owners of respondent firms reported having achieved a bachelor's degree (25.6 percent and 26.9 percent respectively), while 16.2 percent of women owners of respondent firms and 19.9 percent of men owners of respondent firms had earned a master's, doctorate, or professional degree before starting or acquiring their business.

Approximately 61.1 percent of minority owners of respondent firms and 69.1 percent of nonminority owners of respondent firms reported completing least some college education at the time that they started or acquired their business. Nearly one-third (32.6 percent) of minority owners of respondent firms and one-quarter (24.6 percent) of nonminority owners of respondent firms had earned a high school diploma or GED or completed less than a high school education when they established their business. Approximately 21.7 percent of minority respondent owners and 27.2 percent of nonminority owners of respondent firms had obtained a bachelor's degree, while 17.5 percent of minority owners of respondent firms and 18.7 percent of nonminority owners of respondent firms had earned a master's, doctorate, or professional degree before establishing their business.

AGE

In 2007, more than one-third (36.5 percent) of owners of respondent firms were 55 or older, with 24.1 percent between the ages of 55 and 64 and 12.5 percent over the age of 65. Approximately 29.6 percent of owners of respondent businesses were between the ages of 45 and 54; 21.2 percent were between the ages of 35 and 44; 10.5 percent were between the ages of 25 and 34, and 2.2 percent were younger than 25.

About one-quarter (25.3 percent) of minority owners of respondent firms and 38.6 percent of nonminority owners of respondent firms were 55 or older; 29.1 percent of minority owners and 29.7 percent of nonminority owners of respondent firms were between the ages of 45 and 54; 27.7 percent of minority owners and 20.1 percent of nonminority owners of respondent firms were between the ages of 35 and 44; 15.0 percent of minority owners and 9.7 percent of nonminority owners of respondent firms were between the ages of 25 and 34; and 2.9 percent of minority owners and 2.0 percent of nonminority owners of respondent firms were younger than 25.

U.S. BORN

In 2007, 86.4 percent of owners of firms who responded to the survey were born in the United States. However, less than half (44.0 percent) of minority owners of respondent firms were born in the United States. The corresponding number for nonminority owners of respondent firms was 93.9 percent.

DATA COMPARABILITY TO PRIOR SURVEYS

Due to changes in methodology and differences in response rates between gender, ethnicity, and race groups, the Characteristics of Business Owners data are not comparable between 2002 and 2007.

The 2007 and 2002 SBO data were published according to the 2007 and 2002 North American Industry Classification Systems (NAICS) respectively. Prior to the 2002 SBO, data were published according to the Standard Industrial Classification (SIC) system. Additional changes affecting data comparability are discussed in detail in Methodology, in the section titled "Comparability of the 2007 and 2002 SBO Data."