Over the past three decades companies less than 1 year old with 1 to 4 employees have averaged creating more than 1 million jobs per year.
That's a lot of jobs.
Less surprisingly, 86% of all new employer companies have between 1-4 employees. That's not surprising because even well funded Silicon Valley startups usually start with just a couple of people.
But it's easy to forgot or ignore the fact that really big firms like Google, Apple, Caterpillar, etc. started with fewer than 4 people.
We found this data while reviewing some older research from the Kauffman Foundation. Their infographic is below.
This data is for employer businesses, which means it excludes solopreneur businesses and independent contractors. This is common in small business research because of the way government agencies collect and classify small business data.
Companies with traditional full and/or part-time employees (paid via W2s) are considered "employer small businesses".
Solopreneurs, independent contractors and other full and part-time self-employed who do not have traditional employees are considered "non-employer small businesses" and are generally left out of studies on small businesses.
The decision to collect the data this way was made decades ago and long before the rise of contingent talent and the growing ability to hire contractors through online talent marketplaces.
Because of the growing availability of freelance talent, there are literally millions of U.S. solopreneur businesses who hire others on a contingent basis. These firms are not considered employer small businesses and not included in most analyses of the small business sector.
We think this is leading to an undercounting of small businesses and a distorted view of the small business sector.
We'll have more on this topic in the coming months.