The Employment Size Distribution Analyzer: Business Size Patterns by Industry (2022)

What if you could see that some industries are dominated by micro-businesses (1-4 employees) while others are dominated by large firms? This Employment Size Distribution Analyzer reveals exactly how business size patterns vary by industry—and how you can position yourself in markets that match your business size.

The data shows that business size distribution varies dramatically by industry. Understanding these patterns helps you assess competition levels, market structure, and location opportunities that directly impact your competitive strategy.

Analyze business size distribution by industry to understand firm size patterns. This tool reveals which industries have more sm

This analysis examines County Business Patterns (CBP) data from the U.S. Census Bureau to analyze business size distribution—how businesses are distributed across different employment size classes—by industry across all U.S. states. You’ll discover which industries are dominated by small vs. large businesses, how size patterns vary by industry, and where opportunities exist for businesses of different sizes.

What You’ll Discover:

• Industry rankings by business size distribution patterns
• Size class breakdowns revealing industry structure (micro, small, medium, large)
• Industry-specific size patterns impacting competition levels
• Market structure analysis by industry and size
• Location opportunities based on business size alignment

Why This Matters: Understanding business size distribution helps you assess competition levels, evaluate market structure, and make strategic location decisions. Industries dominated by small businesses may have different competitive dynamics than those with large firms.

Business Size Distribution Varies Dramatically by Industry and Location

The Numbers: Accommodation and food services averages range from 13.5 employees per establishment in New York to 44.6 in Hawaii—a 230% difference. This means Hawaii’s industry is dominated by much larger establishments than New York’s.

So What? Industries show different size patterns by location. Tourism-driven markets like Hawaii and Nevada have larger average establishment sizes due to hotels and resorts, while diverse markets like New York have smaller averages with more independent restaurants. Understanding these patterns helps you assess competition levels and market structure.

How to Use This: If you’re a small restaurant, markets with lower averages (<15 employees) may offer more small business competition but less competition from large chains. If you’re a large establishment, markets with higher averages (25+ employees) may offer more large-firm competition but less from small businesses.

Industry-Specific Patterns Reveal Market Structure

The Numbers: Different industries show different size patterns. Accommodation and food services averages 15-20 employees per establishment, while professional services may average 8-12, and manufacturing may average 30-50.

So What? Each industry has unique size distribution patterns. Understanding your industry’s specific patterns helps you assess competition levels accurately and make informed location decisions.

How to Use This: Always analyze size distribution for your specific industry (NAICS code), not just overall averages. Industry-specific data provides accurate competition assessment and market structure understanding.

Location Strategy Must Account for Size Distribution

The Numbers: The difference between high-average states (Hawaii, 44.6) and moderate-average states (New York, 13.5) is 230%—meaning Hawaii’s industry structure is dominated by much larger establishments.

So What? Size distribution directly impacts your competitive position. Markets with many large establishments may have different competitive dynamics than those with many small businesses. Your location choice should match your business size and competitive capacity.

How to Use This: For small businesses, markets with lower averages may offer better size alignment and less competition from large firms. For large businesses, markets with higher averages may offer proven large-firm success but more competition from other large establishments.

Red Flags

• Extremely High Averages (50+ employees): May indicate industry dominated by very large firms, making it difficult for small businesses to compete
• Rapid Average Increases: Markets with rapidly increasing average size may signal industry consolidation
• Average-Size Mismatch: Markets where average size doesn’t match your business size may indicate poor alignment

Green Lights

• Moderate Averages (15-25 employees): Balanced markets with diverse size distribution, offering opportunities for businesses of various sizes
• Size-Aligned Markets: Markets where average size matches your business size offer better competitive alignment
• Diverse Size Distribution: Markets with wide range of establishment sizes offer multiple competitive levels and opportunities

How to Use This Data

Follow this step-by-step process to analyze business size distribution and make data-driven location decisions:

Step 1: Calculate Average Employees per Establishment for Your Industry

Compare average size across your candidate locations:

• State-level: Get broad size distribution comparison
• Industry-specific: Use NAICS-filtered data for your specific industry
• Location-specific: Compare averages across candidate markets

Action: Create a spreadsheet with your top 10 candidate locations. Calculate average employees per establishment (Total Employment ÷ Total Establishments) for your industry in each. Rank by average size.

Step 2: Assess Size Distribution Patterns

Match average size to your business size:

• Low Average (<15 employees): Industry dominated by small businesses, better for small business alignment
• Moderate Average (15-25 employees): Balanced size distribution, opportunities for various business sizes
• High Average (25+ employees): Industry dominated by larger businesses, better for large business alignment

Action: For each candidate location, assess whether the average size matches your business size and competitive strategy.

Step 3: Compare Size Distribution Across Locations

Compare how size patterns vary by geography to identify markets with better size alignment.

Action: Create a matrix scoring each location on size alignment (30%) and total market size (30%). Rank by your strategic priorities.

Step 4: Make Your Location Decision

Combine size distribution analysis with other factors (business climate, personal preferences) to choose your location.

Action: Create a decision matrix scoring each location on: size alignment (30%), total market size (30%), business climate (20%), and personal fit (20%).

Common Use Cases

Scenario 1: Small Business Seeking Size Alignment → Focus on markets with lower averages (<15 employees). These markets offer better size alignment and less competition from large firms.

Scenario 2: Large Business Seeking Proven Markets → Target markets with higher averages (25+ employees). These markets offer proven large-firm success but also more competition from other large establishments.

Scenario 3: Balanced Market Entry → Consider markets with moderate averages (15-25 employees). These markets offer diverse size distribution and multiple competitive levels.

Questions to Ask Yourself

• Does my business size match my industry’s average size in candidate markets?
• Can I compete effectively in markets dominated by larger/smaller businesses?
• Does my business model benefit from size-aligned markets or diverse size distribution?
• Am I entering a market where my size is typical or atypical?

Action Items Checklist

• Calculate average employees per establishment for your industry in top 10 candidate states
• Analyze size distribution patterns (low/moderate/high average) for each location
• Compare size alignment across candidate locations
• Research business climate and industry support in candidate markets
• Assess competition levels based on size distribution patterns
• Verify market size and customer base for each candidate location
• Consult with Business Initiative for location strategy guidance

Industry-Specific Recommendations

Accommodation and Food Services (NAICS 72): Target markets with 15-20 average employees per establishment. This indicates balanced size distribution with mix of small restaurants and larger establishments.

Professional Services (NAICS 54): Focus on markets with 8-12 average employees. Professional services typically have smaller average sizes, indicating small business-friendly structure.

Retail Trade (NAICS 44-45): Look for markets with 10-15 average employees. Retail often has smaller averages, indicating many small, independent stores.

Health Care (NAICS 62): Prioritize markets with 15-25 average employees. Health care has moderate averages, indicating mix of small practices and larger facilities.

Manufacturing (NAICS 31-33): Consider markets with 25-50 average employees. Manufacturing typically has higher averages, indicating larger establishment sizes.

Common Mistakes to Avoid

Mistake 1: Using Overall Averages Instead of Industry-Specific Overall averages don’t reflect your industry’s size patterns. Always use NAICS-filtered data for your specific industry.

Mistake 2: Ignoring Location-Specific Patterns Size distribution varies by location even within the same industry. Always analyze location-specific data, not just national averages.

Mistake 3: Not Considering Your Business Size Average size doesn’t matter if it doesn’t match your business size. Always assess size alignment, not just average numbers.

Mistake 4: Overlooking Size Distribution Range Average size doesn’t show the full distribution. Markets with same average may have very different size distributions (many small vs. few large).

Mistake 5: Ignoring Industry Trends Current size distribution shows today’s patterns, but industry trends show tomorrow’s structure. Markets with changing size patterns may signal industry shifts.

Optimization Strategies

For Size Alignment: Target markets where average size matches your business size. This alignment provides competitive advantages and better market fit.

For Diverse Competition: Focus on markets with moderate averages (15-25 employees). These markets offer diverse size distribution and multiple competitive levels.

For Less Large-Firm Competition: Consider markets with lower averages (<15 employees). These markets are dominated by small businesses, offering less competition from large firms.

For Proven Large-Firm Markets: Prioritize markets with higher averages (25+ employees). These markets offer proven large-firm success but also more competition from other large establishments.

Timing Considerations

Best Time to Enter Size-Aligned Markets: When your business size matches industry average. Size alignment provides competitive advantages and market fit.

Best Time to Enter Changing Markets: Early in size distribution shifts. You establish presence before markets consolidate or fragment.

When to Reassess: Review size distribution data annually when new CBP releases become available. Industry structures change, and what was optimal 2-3 years ago may not be today.

Resource Recommendations

For Market Research:

• Census Bureau County Business Patterns (official CBP data source)
• NAICS code lookup tools (identify your industry classification)
• Industry association reports (industry-specific size distribution data)

For Location Support:

• Business Initiative location strategy services
• Local chamber of commerce (county-level business information)
• State Secretary of State websites (business registration requirements)

For Size Analysis:

• Combine CBP size distribution data with industry-specific research
• Research local business size patterns and competitive structure
• Consult with Business Initiative for personalized location and size strategy guidance

FAQs - Frequently Asked Questions About The Employment Size Distribution Analyzer:

In Summary

Our comprehensive exploration of business size distribution by industry (2022) has revealed critical insights into size patterns, market structure, and location opportunities that can inform strategic business decisions.

Key Findings:

• Business size distribution varies dramatically by industry and location—accommodation and food services averages range from 13.5 employees per establishment in New York to 44.6 in Hawaii (230% difference)
• Industry-specific patterns reveal market structure—different industries show different size patterns, with professional services averaging 8-12 employees while manufacturing may average 30-50
• Location strategy must account for size distribution—markets where average size matches your business size offer better competitive alignment
• Size distribution reveals competition levels—industries dominated by small businesses may have different competitive dynamics than those with large firms
• Moderate averages often offer best balance—markets with 15-25 average employees per establishment provide diverse size distribution and multiple competitive levels

What This Means for Your Business: Understanding business size distribution helps you choose locations where your business size aligns with industry patterns. Markets with size alignment offer competitive advantages and better market fit. Industries dominated by small businesses may have different competitive dynamics than those with large firms. The best approach balances size alignment (matching your business size to industry average) with total market size and competitive capacity.

Practical Applications:

• Location Strategy: Use average employees per establishment to identify markets where your business size aligns with industry patterns
• Market Analysis: Compare size distribution across locations to assess competition levels and market structure
• Competitive Analysis: Understand whether you’ll compete primarily with small businesses, large firms, or a mix
• Expansion Planning: Target markets with size-aligned averages that match your business size and competitive strategy

Next Steps:

1. Calculate average employees per establishment for your industry in top candidate locations
2. Assess size distribution patterns (low/moderate/high average) for each candidate location
3. Compare size alignment across candidate locations to identify optimal markets
4. Research business climate and industry support in size-aligned candidate markets
5. Consult with Business Initiative for personalized location and size strategy guidance

Ready to take action based on this data?

This data can help you make informed decisions about business location, market entry, and strategic planning.

Business Initiative offers expert services to help you leverage this information:

• Explore Profit Margin
• Explore Break Even Analysis
• Explore Break Even

For personalized advice, schedule a consultation with Business Initiative or reach out through our contact form.

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