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A large percent of all retail trade and service establishments and contract construction firms are small. Since these are increasing in number, the number of small firms have also grown since 1929. The difficulties confronting small business enterprises are important. They also have certain advantages which should be fully recognized. Many people believe these advantages should be maintained. This attitude has been summarized as follows:21

"From the evidence submitted to the subcommittee it seems clear that one of the important questions facing the American people today is to determine what steps can and should be taken to preserve an open door for investment in little and local business in terms of ownership as well as in terms of debt. That problem is paramount to the development of a steadily expanding economy." Size and distribution of respondents

Since the remainder of this discussion will concern itself primarily with results obtained from the questionnaire, it seems desirable at this point to present data which will indicate the size, type, and location of the industries represented in the response to the questionnaire. The importance of small business in the American economy is well recognized. It is equally well known that small business is faced with definite financial and managerial problems. The lack of specific data on the financial needs of small business and the desire to better understand the position of small business were basic facts underlying the questionnaire survey by the National Association of Manufacturers. The questionnaire was designed to elicit facts and opinions from manufacturers regarding their experience, current and past financial needs and requirements, and what the Government had done or could be expected to do to aid small business.

More specifically, the members were asked to indicate the type of business, the form of organization, the number of employees, the firm's net worth, the amount of funds needed (if any), and the geographical location of business firms. Of the 3,221 respondents to the questionnaire who gave their size, 27 percent had less than 50 employees, nearly 48 percent had 100 or less, and 73 percent had 250 employees or less. Only about 15 percent of the respondents had 500 or more employees. A distribution of the respondents based on the number of employees is presented in Table 3.

TABLE 3.-Classification of respondents by number of employees

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1 Excludes 13 cases which either did not report employment or reported that employment "varies.”

21 Volume and Stability of Private Investment, report of Subcommittee on Joint Committee of Economic Report, S. Con. Res 26, 81st Cong., 2d sess., S. Doc. No. 149. Government Printing Office, Washington, 1950, p. 7.

TABLE 4.-Geographical distribution of respondents compared with all manufacturers

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1 Excludes 10 firms from Hawaii and 36 firms which did not supply this information.

The respondents to the questionnaire were widely distributed geographically. There is a high concentration of industry in the Mid-Atlantic States, East North Central States, Pacific States, New England, South Atlantic, and the West North Central States according to the United States Census of Manufacturers. The distribution of the respondents to the questionnaire geographically compare favorably with that of the census. (See table 4 and chart III.)

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Chart II. ESTIMATED NUMBER OF OPERATING FIRMS, NEW BUSINESSES

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Source: Survey of Current Business

TOTAL FIRMS

NEW FIRMS

DISCONTINUANCES

1949

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From the point of view of net worth, the size of the manufacturing concerns replying to the questionnaire is shown in table 5. Sixty-seven percent had a net worth of less than $1,000,000; 60 percent less than $750,000; 48 percent less than $500,000, and nearly 29 percent had less than $250,000 net worth.

The sample consists largely of corporations. Only about 4 percent and 5 percent represented individual proprietorships and partnerships, respectively. (See table 6.)

TABLE 6.-Classification of respondents, by types of organization

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The respondents to the questionnaire represent 16 different industries. table 7.) This distribution by industry, together with those for number of employees, the net worth and geographical distribution, give a broad sample which justifies the belief that the respondents' replies represent a broad cross section of the experience and needs of industry. It should be emphasized again that the respondents to this questionnaire are largely manufacturers and the data apply specifically to the record and experiences of firms engaged in industry. TABLE 7.-Classification of respondents, by types of industry

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The lack of continuity among small-business concerns has been a subject of much discussion in recent years. This subject has received considerable attention from those who see a great tendency for large concerns to absorb small ones or to make competition so strong against small firms that they are obliged to sell to a larger competitor or to liquidate.

The cause of the lack of continuity of small business, is also of special interest in the study of the "discontinuances of business" or changes in business population. In order to attempt to throw some light on the continuity of small business, the manufacturers were asked to report on the sale or transfers of business which had come to their attention in recent years. They were specifically requested to indicate the method and nature of the transfer.

The members of the association reported on 1,661 cases involving the transfer of business. Table 8 and chart IV show the distribution of these transfers according to the party obtaining the business and to methods used in such transfers. As one might well expect, the largest percentage was obtained by or transferred to competitors. Out of 1,661 cases, 709 or 43 percent went to competitors. Other members of the family took in 266 or 16 percent of the businesses reported trans

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