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Rachel Justis
Indiana Business Research Center

Carol Rogers
Indiana Business Research Center

George Vlahakis
IU Media Relations

Last modified: Monday, September 11, 2006

Study by IUís Kelley School of Business reveals that small businesses are big in Indiana

Sept. 11, 2006

BLOOMINGTON, Ind. -- More than half of all Hoosiers work in non-farm businesses with less than 100 employees. These businesses also make up more than 50 percent of establishments that have fewer than five employees in more than two-thirds of the state's counties, according to a new report released by the Indiana Business Research Center at Indiana University's Kelley School of Business.

Small businesses in the report are defined as those with fewer than five employees. The number of all establishments in Indiana grew in number by 1,834, or 1.2 percent, between 2003 and 2004, according to an article in the new issue of inContext, a publication of the IBRC, the Kelley School and the Indiana Department of Workforce Development.

"When looking at employment, Indiana far outpaced its neighbors in the past year, adding almost 46,000 employees," wrote Rachel Justis, the IBRC's managing editor and author of the report.

The largest group of businesses was establishments with 20 to 49 employees, which employed 17 percent of all Hoosiers, or 432,100 people. The research is based on data from a 2004 Census Bureau report on county business patterns, which only included establishments with paid employees in the private non-farm sector and omitted those working in government, farming and sole proprietorships.

Nationally, 54.4 percent of all establishments have fewer than five workers. In Indiana, that number is 49.7 percent, compared with 54.2 percent in Illinois and 49.2 percent in Ohio.

Justis found that these very small enterprises tended to include those in the following sectors: forestry, fishing and hunting; real estate, rental and leasing; and professional, scientific and technical services.

Among enterprises with more than 1,000 employees, not surprising was that manufacturing and health care had the most people. Indiana had 62 establishments with at least 1,000 employees, employing almost 117,500 people. The health care and social assistance sector had 41 establishments with more than 1,000 employees, employing more than 89,600 people.

Small businesses with less than five employees made up at least half of all establishments in 72 of Indiana's 92 counties. At 65 percent, Union and Warren counties had the highest percentage of small businesses. In Brown, Carroll, Crawford, Franklin, Fountain, Ohio and Switzerland counties, more than 60 percent of establishments employed fewer than five people.

Meanwhile, fewer than 45 percent of establishments in Bartholomew, Elkhart and Vanderburgh counties have less than five employees.

Indiana's Occupational Employment Outlook to 2014

In inContext's cover story, Jon Wright and Bob Ferguson of the Indiana Department of Workforce Development made projections about employment growth in Indiana and where it will come from.

Indiana employment is expected to grow by 302,600 jobs in the next seven years, or a rate of growth of 10 percent between 3,056,560 in 2004 to 3,359,170 by 2014. Another 742,160 job openings will be created by retirees and others leaving the workplace in Indiana.

The largest number of openings will come in retail sales and the food service industry. Wright and Ferguson write that this is because of expected growth in industries associated with leisure and hospitality, as well as "the reality that workers move in and out of these jobs quickly -- creating openings for replacements."

The 10 fastest growing major occupational groups make up 78 percent of the total growth for the state and include professional and related occupations, with 19.6 percent growth; service occupations, 14.9 percent; management, business and financial operations occupations, 14 percent; and construction and extraction occupations, 11.5 percent.

Factors fueling this growth also include Honda's decision to locate a plant in Greensburg, Toyota building automobiles at Subaru in Lafayette, a new Nestlť plant in Anderson and American Commercial Lines in Jeffersonville. The Major Moves initiative also will provide careers in the construction industry.

"The employment brought about by Major Moves and other economic development initiatives will not be limited to construction," Wright and Ferguson wrote. "Production occupations are projected to increase by nearly 2 percent. This occupational group has declined and is expected to continue declining nationally, which makes the projected turnaround in Indiana quite notable."

inContext is published online every month at, offering substantive articles on the Indiana economy in context within the state and the nation.

Established in 1925, the IBRC is an information outreach service of the Kelley School. It provides and interprets economic, demographic and social information needed by business, government, educational and other nonprofit organizations and individual data users in the state and throughout the nation. Its research can be found online at