Experts often use patenting activity as a proxy for innovation. Data from the National Science Foundation show that small businesses that engage in R&D generate more patents per employee than larger businesses that engage in R&D. However, small business patenting activity fell significantly following 2010.
The decline is now reversing. Small businesses recovered to two-thirds of peak patent application levels from 2015 to 2018 and recovered to half of peak patents received levels in the same timeframe.
For more, read Small Business Facts: Small Business Innovation Measured by Patenting Activity.
For more information on the Office of Advocacy, visit //advocacy.sba.gov/, or call (202) 205-6533.
America's Seed Fund: The SBIR and STTR Programs
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive programs that encourage domestic small businesses to engage in Federal Research/Research and Development (R/R&D) with the potential for commercialization. Through a competitive awards-based program, SBIR and STTR enable small businesses to explore their technological potential and provide the incentive to profit from its commercialization. By including qualified small businesses in the nation's R&D arena, high-tech innovation is stimulated, and the United States gains entrepreneurial spirit as it meets its specific research and development needs.
Central to the STTR program is the partnership between small businesses and nonprofit research institutions. The STTR program requires the small business to formally collaborate with a research institution in Phase I and Phase II. STTR's most important role is to bridge the gap between performance of basic science and commercialization of resulting innovations.
SBA manages the SBIR/STTR program and other federal agencies offer grants for technology research and development.
The mission of the SBIR/STTR programs is to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.
The program's goals are to:
- Stimulate technological innovation.
- Meet Federal research and development needs.
- Foster and encourage participation in innovation and entrepreneurship by women and socially or economically disadvantaged persons.
- Increase private-sector commercialization of innovations derived from Federal research and development funding.
In addition, the STTR program aims to:
- Foster technology transfer through cooperative R&D between small businesses and research institutions.
Visit //www.sbir.gov/ for more information.
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Small businesses are vital to our local and national economy, but sometimes they need a helping hand.
The headlines are always big numbers: “GE adds 1,400 jobs”; “Boeing adds 1,000 jobs.” But small numbers also add up to large sums. Small business, in aggregate, is a real engine of economic development, creating two out of every three new jobs in the economy.
The definition of small business varies a bit, depending on the organization collecting statistics. One might define a small business as less than 100 employees, while another might say less than 500. Annual revenue is sometimes used, and often, the definition varies depending on the industry. But most of us would say, “We know it when we see it”—independently owned and operated, not many employees, operated for profit… and probably struggling every day.
Lifeblood of Our Economy
Small business is critical to economic recovery and to the overall economy, as President Barack Obama declared during National Small Business Week last May when he called small businesses “the lifeblood of our economy, employing half of our country’s workforce.” The Small Business Administration reports more than 28 million small businesses (less than 500 employees) in 2011, while the 17,700 businesses with more than 500 employees made up just 0.06 percent of all businesses.
Small business is also a strong driver for stimulating creativity and growth. In aggregate, small businesses hold 10 times as many patents as large businesses. Of high-patenting firms—those with 15 or more patents in a four-year period—small businesses produced 16 times more patents per employee than large patenting firms. They also employ 41 percent of high-tech workers, such as scientists, engineers and computer workers.
Small business is usually local business, and local businesses have a tremendous impact on the communities in which they are located. One study by strategic planning firm Civic Economics found that for every $100 spent in a locally-owned independent business, $68 is returned to the community through taxes, payroll and other expenditures. If the same $100 is spent in a national chain, only $43 is returned to the local community.
Small businesses benefit the local community in other ways as well. They bring growth and innovation, provide employment opportunities, contribute to and support larger businesses in the area, and adapt quickly to changes in the business and economic climate. They also tend to be very generous to the local community in supporting fundraising efforts and local events. But small business needs help.
According to the Brookings Institution, the rate of formation of new businesses in 2011 was about half what it was in 1978. In fact, the rate of “firm exit” that year was greater than the rate that new businesses were formed. In addition, the Small Business Administration reports that only half of new businesses survive five years or more, and only a third survive 10 years or more. SCORE can help.
Growing Small Business
SCORE is a national nonprofit association dedicated to helping small businesses get started, grow and achieve their goals through education and mentorship. Founded by the Small Business Administration in 1964, it recently celebrated its 50th anniversary with an announcement that it had helped more than 10 million entrepreneurs. The Peoria-area chapter launched in 1965 and now serves entrepreneurs in 10 counties: Peoria, Fulton, Knox, Mason, Woodford, Putnam, Stark, Tazewell, Warren and Marshall.
SCORE Peoria offers free, confidential personal mentoring to help those who are thinking about starting a new business, as well as small businesses that are facing challenges or trying to grow. In addition, it offers targeted workshops on specific topics that small businesses need to help them succeed.
How is SCORE different? First, the personal mentoring is free and confidential, from trained volunteers who have real-world experience in running a business. Second, the SCORE mentor understands that, in most cases, ongoing conversations are needed, as the entrepreneur may solve one problem, only to encounter another. He or she may solve a marketing problem with coaching from a volunteer skilled in marketing, only to need help negotiating a building lease. SCORE is focused on building relationships for an ongoing dialogue with the entrepreneur, bringing in mentors with a variety of specialized skills and experiences to help as needed.
A Range of Resources
Martha Campbell, a long-time volunteer with SCORE Peoria, describes the benefits of the group’s services. “Successfully starting a new business or profitably operating a small business is hard work,” she says. “SCORE can help. The mentoring is free—which is important because these businesses just don’t have spare cash to spend on expensive consultants—and confidential. Workshops on a variety of important topics are also available. Volunteers with SCORE are proud of the help we offer to entrepreneurs.”
SCORE offers a myriad of resources, both in person and online, to help small and start-up businesses. The organization’s tagline—“for the life of your business”—is meaningful in two ways. First, the help from SCORE can literally enable a failing business to live and thrive, and second, SCORE can continue to help a small business throughout its life as it seeks growth or encounters new difficulties. No matter the company’s need, small business has a trusted advisor in SCORE. iBi