Small Business Profile: SOUTH DAKOTA 

Small businesses are the heart of South Dakota’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 South Dakota’s economic health.

Number of Businesses.  South Dakota had an estimated total of 79,119 small businesses. Employer firms totaled 25,000 in 2006, up 1.8 percent from the previous year. Of this total, an estimated 96.9 percent, or 24,000 were small. Self-employment (incorporated and unincorporated) totaled 71,000 in 2006, an increase from 64,000 in 2005. Non-employer firms totaled 56,000 in 2005, an increase of 3.7 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 15,573, represented 22.2 percent of the state’s 70,000 businesses, and generated $1.5 billion in revenues. Employer firms owned by women totaled 2,700, an increase of 31.1 percent since 1997. Women numbered 132,048 or 34.0 percent of the state’s self-employed persons in 2006, an increase of 1.2 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 300, and 31 percent of them were employer firms; Black-owned firms numbered 100, and 18.9 Hispanic-owned firms totaled 400, and 27.6 percent In 2002, American Indian and Alaska Native-owned firms numbered 1,300, and 11.4 of them were employer firms; while Native Hawaiian and other Pacific Islander-owned businesses numbered 10, and 15.4 (Source: U.S. Dept. of Commerce, Census Bureau.)

Business Turnover. An estimated 2,003 new employer firms were created in 2006, which is 4.7 percent less than the number created in 2005. Business bankruptcies totaled 47 in 2006, down from 196 the previous year. Business terminations changed little between 2005 and 2006, and totaled 2,400 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 63.5 percent of the state’s non-farm private labor force in 2004, which was above the national average of 50.9 percent. These 21,000 firms accounted for 96.9 percent of the state’s employer businesses, and they employed 196,000 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 4.5 percent, from $2.2 billion in 2005 to $2.3 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 decreased 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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