Small Business Profile: HAWAII 

Small businesses are the heart of Hawaii’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 Hawaii’s economic health.

Number of Businesses.  Hawaii had an estimated total of 117,200 small businesses. Employer firms totaled 31,200 in 2006, up 2.3 percent from the previous year. Of this total, an estimated 96.9 percent, or 30,200 were small. Self-employment (incorporated and unincorporated) totaled 80,300 in 2006, an increase from 72,400 in 2005. Non-employer firms totaled 87,700 in 2005, an increase of 4.0 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 29,900, represented 30.2 percent of the state’s 99,200 businesses, and generated $4.6 billion in revenues. Employer firms owned by women totaled 4,500, an increase of 20.6 percent since 1997. Women numbered 30,700 or 38.2 percent of the state’s self-employed persons in 2006, an increase of 1.0 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 45,000, and 10,300 of them were employer firms; Black-owned firms numbered 800, and 100 were employer firms; Hispanic-owned firms totaled 3,100, and 500 were employer firms. American Indian and Alaska Native-owned businesses numbered 900; employer firm data for this group are not available. Native Hawaiian and other Pacific Islander-owned businesses numbered 8,360, and 1,000 were employer firms. (Source: U.S. Dept. of Commerce, Census Bureau.)

Business Turnover. An estimated 3,813 new employer firms were created in 2006, which is 1.3 percent more than the number created in 2005. Business bankruptcies totaled 25 in 2006, down from 81 the previous year, while business terminations decreased from 3,794 in 2005 to 3,789 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 56.8 percent of the state’s non-farm private labor force in 2004, which was above the national average of 50.9 percent. These 25,000 firms accounted for 96.9 percent of the state’s employer businesses, and they employed 268,900 people (Table 1). Small businesses added a total of 6,900 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 3.3 percent, from $3.0 billion in 2005 to $3.1 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 state increased in 2006 (Table 3). For a list of financial institutions in the state 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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