Small business IS Montana

Small business in Montana is most business.
According to definitions used by the U.S. Small Business Administration, more than 97 per cent of the state’s businesses are classified as “ small,”
and more than 70 percent of all employment in the state is in small business. Only 18 businesses in the state are classi fied as “ large” by SBA
standards.

By Vikki McLaughlin of the Standard Staff

The SBA has established two widely used size standards to deter mine eligibility as a small business — a maximum of 500 employees for most
manufacturing and mining industry businesses, and a cap of $5 million in average annual gross receipts for most non-manufactur ing industries.
However, many exceptions exist, the SBA says.

In 2000, Montana had 31,223 employer businesses, and nearly 97.8 percent were small — with fewer than 500 employees. The num ber of
self-employed persons was estimated at 63,938, according to the SBA’s Office of Advocacy. Small business employment represented 72 percent of
the state’s total employment in 1998, employing 199,668 of the state’s 277,144 total non-farm private sector workers, the SBA says. Montana’s gross
state product in 1999 was $20.6 billion.

Women-owned businesses constituted 22,400 firms — 24 percent of all firms in the state in 1997. Those firms employed 22,240 workers and
generated $2 billion in revenues.
Minority-owned businesses in 1997 totaled 3,400, representing 3.6 percent of the state’s businesses. Those businesses generated $.4 bil lion in
revenues and employed 3,503 workers in 800 businesses.

In 1998, according to U.S. Census figures, Montana had 599 firms with 500 employees or more. Firms with 100 to 499 employees numbered 370
and firms with 20 to 99 num bered 1,917. The vast majority — 24,456 firms — had fewer than 20 employees (including selfemployed owners with no
employ ees).

In southwest Montana, Silver Bow County had a total of 1,151 business establishments, with 12,470 employees in 1999. (An estab lishment is
defined by the Census Bureau as a business operating in a single physical location, and not necessarily the same as a firm or company, which may
consist of one or more establish ments.)

Beaverhead County’s establishments numbered 367, with 2,180 employ ees;

Deer Lodge County had 250
establishments with 2,431 employees;

Granite County had 89 establishments with 489 employees;

Jefferson County had 194 establishments and
1,453 employees;

Madison County had 255 establishments with 1,091 employees;

and Powell County had 142 establishments with 1,160
employees.

According to figures from the SBA’s Office of Advocacy, Montana’s forma tion of new firms in 2000 occurred at a rate of 12.7 percent, which gave
the state a ranking of 25th among the nation’s states. The rate of firm terminations was close at 12.6 percent, which lands Montana at 31st in the
nation.

However, terminations — which means the business no longer exists for whatever reason — may result in successor firms, which are not listed as new
firms, the SBA says.

A high rate of business formations and terminations is actually a good sign in terms of entrepreneurial development, according to Robyn Hampton,
the state director of small business development centers.

” Montana’s ranking is indicative of Montana business,” Hampton said. “ It tends to be slightly below the national average in risk tolerance.”

The new economy indices look at the spread between new starts and termina tions, Hampton said. The economy is rated higher — seen as healthier
— with a higher rate of terminations because it means that business people are going after something better, something that will pay better.

“ However, in our Montana culture with a small business economy, it seems that people are willing to stick with their business a little longer, even if
it’s not paying as well as they’d like, Hampton said.

” They don’t stop the business because they’re only making $25,000 or $30,000 a year,” Hampton said. But in another economy, people would be
quicker to quit the business and start something else or get a good-paying job. People here tend to be happier with the status quo, Hampton said.

Montana isn’t alone in its transition from larger industries like mining, forestry and industrial plants to small business making up its economy. That
trend is happening on a national level as well, Hampton said. In 2000, 141 Montana businesses declared bankruptcy, an increase of 16.5 percent
over 1999. Montana was ranked fourth in the nation for bankruptcies, with the first three states listed as Kentucky with a 26 percent increase over the
previous year, Ohio with 23 percent and Oklahoma with 20 percent. Nearby Wyoming was ranked 49th in the nation as its business bankruptcies
dropped by 32 percent in 2000, Idaho was ranked 42nd, with a 21 percent decrease and North Dakota was 28th with an 8 percent drop.

Small business employment represented 72 percent of Montana’s total employment in 1998. Small businesses employed 199,668 of the state’s
277,144 total non-farm private sector workers, according to Census statistics.

Non-farm proprietors’ share of small business income totaled $1.8 billion in 2000, an increase of 6.3 percent over 1999 SBA loans.
During the fiscal year ending Sept. 30, 2001, the SBA’s Montana office guar anteed 366 loans totaling $77.4 million. Of the 366 loans, 357 were
made through the SBA’s 7(a) Guaranty Loan Program, which provides short- or long-term financing for small business startup or expansion needs,
according to a news release from the SBA.
Women-owned businesses were the recipients of 68 loans totaling $12.03 mil lion, while 46 loans went to veterans for $8.9 million, and 23 loans
totaling $5.2 million went to minority business owners.

The SBA financed 96 new businesses during the year, for a total of $14,573,100. The most frequently financed business during the year included
eating and drinking establishments, ambulatory health-care services, special trade contractors and professional, scientific and technical services.

In southwest Montana, Silver Bow County was the only one to receive more than $1 million in loans, with 15 loans totaling $2,238,000, according
to the SBA.

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