IEDC: The growth of businesses with no desire to grow

One particular sector of U.S. manufacturing is making a dramatic comeback, but they’re not hiring. Firms with no employees other than the owner have seen strong growth since the Great Recession (Wall Street Journal). But many intend to stay small, as they are typically run by craftspeople driven less by profit and more by lifestyle.

Their growth is not just a blip on the radar screen, but a very real trend. From 2004 to 2014:

  • The number of no-employee manufacturers grew by 17 percent and now stands at about 350,000 firms
  • Food manufacturers in this sector nearly doubled
  • Beverage and tobacco makers grew 150 percent
  • Chemical manufacturers, such as soap makers, grew nearly 70 percent.

In fact, 80 percent of all U.S. firms are sole proprietorships. Also surprising is this sector’s resilience, at least when compared to firms with employees, the number of which declined by 12 percent over the same period above. The biggest boon to this sector has been access to quality, high-speed Internet, enabling them to sell their products far and wide.

Economic developers, of course, are intent on helping businesses expand, but their efforts may be frustrated when engaging these outfits, since many have no desire to grow. Many sole proprietors often are content to be their own bosses and focus on their craft. Some would like to grow but are intimidated by the paperwork, accounting, and tax issues involved in hiring even one employee, an area where EDOs certainly can help through small business support services.

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