JP Morgan Chase released a report “The Small Business Sector in Urban America,” which explores the health of small businesses across 25 major American cities.

The report looks at 290,000 firms between 2013 and 2017; the data is not likely skewed by the financial crisis and points to challenges in the small business economy. First, the annualized revenue growth rate of sample firms is -.76%. Most of the revenue growth occurs from new firms and is generated by only 5% of the best performing firms.

Other key takeaways include:

  • 80% of small businesses have no employees.
  • Only four cities had small business activity growth at a faster rate in the central city than in the total metro area. In only eight cities, growth occurred equally in the center city and the metro area. The majority of small business activity in cities grew faster in the metro area.
  • New firms grew at 6%, while mature firms lost 3%.

The annual aggregate revenue growth rate is affected by the health of the local economy. Columbus’ small business activity outperformed other cities substantially with new businesses growing at 13%.

The report also looked at differences between firms that grew organically, financed growth, and stable growth firms. Firms that financed were only about 3% but generated a disproportionate 21% share in revenue.

Stable micro-firms, firms with no payroll and less than $500,000 in expenses, generated 17% of revenue.

The report lastly looks at small business revenue growth by sector and identifies conclusions and policy implications to bolster the small business economy in the United States.

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