Small Business Profile: DISTRICT OF COLUMBIA 

Small businesses are the heart of the District of Columbia’s economy. Research by the Office of Advocacy shows that small businesses create most of the nation’s net new jobs, and they bring dynamic ideas, innovative services, and new products to the marketplace. They account for almost all of the nation’s employer firms and generate half of non-farm private output. New business creation is key to a state’s ability to increase its gross state product, state personal income, and total state employment. This small business profile uses the most recent data available to demonstrate the valuable contributions that small businesses make to the District of Columbia’s economic health.

Number of Businesses.  The District of Columbia had an estimated total of 65,200 small businesses. Employer firms totaled 28,500 in 2006, up 3.0 percent from the previous year. Of this total, an estimated 93.0 percent, or 26,500 were small. Self-employment (incorporated and unincorporated) totaled 24,300 in 2006, an increase from 22,700 in 2005. Non-employer firms totaled 39,500 in 2005, an increase of 9.6 percent since 2004. (Sources: U.S. Dept. of Labor, Employment and Training Administration; U.S. Dept. of Commerce, Census Bureau; U.S. Dept. of Labor, Bureau of Labor Statistics.)

Women-owned Firms. In 2002, businesses owned by women numbered 15,700, represented 33.4 percent of the District’s 47,200 businesses, and generated $2.4 billion in revenues. Employer firms owned by women totaled 2,400, an increase of 16.0 percent since 1997. Women numbered 10,500 or 43.2 percent of the District’s self-employed persons in 2006, an increase of 21.3 percent from the previous year. (Sources: U.S. Dept. of Labor, Bureau of Labor Statistics; U.S. Dept. of Commerce, Census Bureau.)

Minority-owned Firms. In 2002, Asian-owned firms totaled 2,400, and 1,400 of them were employer firms; Black-owned firms numbered 12,200, and 1,200 were employer firms; Hispanic-owned firms totaled 2,200, and 400 were employer firms. American Indian and Alaska Native-owned firms numbered 200, and 40 of them were employer firms. Native Hawaiian and other Pacific Islander-owned businesses numbered 50; data on employer firms are unavailable. (Source: U.S. Dept. of Commerce, Census Bureau.)

Business Turnover. An estimated 4,232 new employer firms were created in 2006, which is 2.0 percent less than the number created in 2005. Business bankruptcies totaled 27 in 2006, down from 46 the previous year, while business terminations decreased from 4,000 in 2005 to 3,100 in 2006. (Sources: U.S. Dept. of Labor, Employment and Training Administration; Administrative Office of the U.S. Courts; U.S. Dept. of Commerce, Census Bureau.)

Employment. Small firms employed 47.4 percent of the District’s non-farm private labor force in 2004, which was below the national average of 50.9 percent. These 14,700 firms accounted for 93.0 percent of the District’s employer businesses, and they employed 207,200 people (Table 1). Small businesses added a total of 7,000 net new jobs between 2003 and 2004 (Table 2). (Source: U.S. Dept. of Commerce, Census Bureau, Statistics of U.S. Businesses.)

Small Business Income. Non-farm proprietors’ income, which is a share of small business income, increased by 5.0 percent, from $4.0 billion in 2005 to $4.2 billion in 2006. (Source: U.S. Dept. of Commerce.)

Finance. Commercial banks and savings institutions continued to be important sources of small business financing. The number of lending institution branches in the District increased in 2006 (Table 3). For a list of financial institutions in the District that make the most loans to small businesses, visit www.sba.gov/advo/research/lending.html.

To learn more about the Office of Advocacy’s data and analyses of small business, visit www.sba.gov/advo/research, call (202) 205-6533, or email advocacy@sba.gov.

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