By Ethan Forman
SALEM — The smallest of businesses may have a bigger impact than you think, according to a new study commissioned by the Enterprise Center at Salem State College.
One in every four jobs in Essex County in 2006 was a proprietor, the study said, while sole proprietorships and micro-businesses, those with five or fewer workers, made up 88 percent of all businesses in Essex County. In other words, 12 percent of businesses on the North Shore are super-small.
And they may not be showing up in the usual economic indicators. Those who find themselves out of work often wind up opening their own businesses, creating jobs and wealth not seen in government unemployment numbers, the study says.
Laurence Goss, a Salem State geography professor, and graduate student Moumita Dutta Gupta conducted the study using Census and Bureau of Economic Analysis statistics.
Christine Sullivan, director of the Enterprise Center, used to be one of those proprietors. She ran her own marketing firm for 16 years. She chatted with The Salem News last week about the study results.
Why are there so many sole proprietors, and why are there so many of these small businesses?
I think the answer is in two parts. We've always had a country where one of the value systems that drives America is individualism. There's always been a lot of individuals starting businesses. ... What has happened in our world is computers have made it possible to not have to be in an office.
Where do most of these small businesses see themselves in two years in terms of adding people?
They will answer you, 'That is not our model. That is not how we are going to grow. We are going to grow through alliances with other businesses like us that leverage us into bigger contracts, or we are going to grow through contract workers or part-time workers,' because they will tell you they want to keep their overhead really low.
So they're not looking to become the next IBM or big bank on the North Shore?
They are saying, we are looking to increase our revenues. We are looking to make more money, and we are looking to pay more taxes because we are going to make more money. And we are going to do it in a way that isn't measured by your traditional measuring stick.
Maybe they would like to have more employees, or they would like to grow in an employee sense?
They are trying to find other ways around that, part time, contract, you know, all kinds of ways to avoid doing that. Health care is huge for them. ... One of the reasons that it's so huge for them is the cost of it. And little, little businesses like this can't afford it.
The study looks at the trends from 2001 to 2006. What lessons can someone take away in this economy? Is there a trend toward micro-businesses and sole proprietorships?
I think there really is a trend. What that study showed was the growth — the self-employed grew much faster than the employed.
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Staff Writer Ethan Forman can be reached at 978-338-2673, or by e-mail at eforman@salemnews.com.
