E-commerce small businesses in the Midwest are booming

Andrey Kamenov

Andrey Kamenov, Ph.D. Probability and Statistics

Recently, we published a series of posts about the regional patterns in employment changes. Naturally, most of the time the greatest growth occurred in larger industries, such as hospitals or schools.

It would be interesting to see the same patterns specifically relating to small businesses in the Midwest. For this purpose, we focused on establishments with fewer than 10 employees so that our study includes sole proprietors as well as small firms.

The Midwest does not have the largest number of small businesses numbers among all regions — as shown in the chart below, it was largely unaffected by the early to mid-00’s growth which is clearly visible in the southern and western states.

In 2012, the last year for which we have data at the moment, a very modest growth (just over 1,000 businesses) was registered in the region, which is the smallest number among all four regions.

Geographically, there is a clearly visible pattern: the number of small businesses per 1,000 residents increases towards the western side of the region. In many counties in both Dakotas and Nebraska, there is more than one small business for each 25 residents!

To find which industries experienced the largest increase in the number of small firms, we compare the 2007 and 2012 datasets using the smallest possible NAICS classification groups that still include at least 1,000 establishments.

The securities brokerage subsector was the fastest-growing subsector, expanding by over 40 percent in five years. Even more impressive growth is registered in the e-commerce subsector: the number of small businesses in this subsector increased by more than 2.5 times!

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About Andrey Kamenov

Andrey Kamenov

Andrey Kamenov, Ph.D. Probability and Statistics

Andrey Kamenov is a data scientist working for Advameg Inc. His background includes teaching statistics, stochastic processes and financial mathematics in Moscow State University and working for a hedge fund. His academic interests range from statistical data analysis to optimal stopping theory. Andrey also enjoys his hobbies of photography, reading and powerlifting.

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