California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

A study just released by the Small Business Administration’s Office of Advocacy 
entitled High Impact Firms: Gazelle’s Revisited contradicts previous findings that
small new businesses were responsible for the majority of new jobs in the US economy.

The report found that businesses entitled ‘high impact firms’ which are older are the true
source of employment and revenue growth.  The study, conducted by the Corporate
Research Board identified that high impact firms are generally small and have been in
business about 25 years.

The report claims that local economic development officials would benefit from allocating
their resources towards cultivating high-growth firms rather than towards trying to increase
entrepreneurship overall or working to attract companies that are relocating. Riverside County
has one of the largest concentrations of ‘high-impact’ firms in the nation.

Prior research in the 1980s showed that fast-growing firms, pegged as ‘gazelles,’ were responsible
for most employment growth. The definition of gazelles was based on revenue growth; this study
examines firms with significant revenue growth and expanding employment. Other small business
studies have taken up the phrase ‘gazelles’ and added ‘mice,’ which are small firms that add little
to employment, and ‘elephants,’ which are large firms that shed jobs.

I am Tim Johnson and this has been the California Business Minute.

For further information see the report at http://www.sba.gov/advo/research/rs328tot.pdf