RESEARCH NOTES

8.5 Million SMEs but Only 7,000 New Jobs… 78% of Increased Enterprises are ‘One-Person Businesses’

The number of domestic SMEs approached 8.5 million, but employment and sales growth failed to keep pace with the expansion in the number of businesses. While total enterprises increased by over 200,000, one-person businesses grew by 225,754, whereas enterprises with two or more workers actually decreased by 25,117. With 78.4% of SMEs operating as one-person businesses, it has become evident that a rise in the number of companies does not directly translate into broader employment. As small enterprises shrink and sole proprietors increase, the scaling link connecting one-person operators to businesses that hire workers has weakened. The core challenge in the era of 8.5 million SMEs is not further increasing company counts, but expanding enterprises with two or more workers while improving employment, sales, and productivity.