The Establishment Size Distribution: Business Counts by Size Category (2022)

What if you could see that Texas has 17.5 employees per establishment while Wyoming has 9.0—revealing exactly how business size distribution varies by location? This Establishment Size Distribution analysis reveals business counts by size category—and how you can position yourself in markets with the business size structure that matches your competitive strategy.

The data shows dramatic differences: average employees per establishment ranges from 17.5 in Texas to 9.0 in Wyoming—a 1.9x difference. This isn’t just about geography—it’s about understanding establishment size distribution, business size patterns, and market structure that directly impact your competitive positioning and market entry strategy.

Note: Full size category breakdown (1-4, 5-9, 10-19 employees, etc.) requires EMPSZ-filtered data. This analysis uses average employees per establishment (EMP/ESTAB) to indicate size distribution patterns, acknowledging that full category breakdown would require EMPSZ data.

See establishment size distribution to understand business counts by size category. This analysis reveals size distribution patterns a

This analysis examines County Business Patterns (CBP) data from the U.S. Census Bureau to analyze establishment size distribution—business counts by size category, revealing how businesses are distributed by size across all U.S. states. You’ll discover which states have larger vs. smaller average business sizes, how size distribution varies by location, and where opportunities exist for businesses in different size categories.

What You’ll Discover:

• State rankings by average employees per establishment (size distribution indicators)
• Industry-specific size distribution patterns revealing business size structure by location
• Location-specific size indicators impacting competitive strategy
• Business size distribution analysis by industry and location
• Size category indicators for strategic business decisions

Why This Matters: Understanding establishment size distribution helps you identify where business size structure matches your competitive strategy, assess market structure differences, and make strategic location decisions. Markets with different size distributions offer different competitive dynamics and market structures.

Note: Full size category breakdown (1-4, 5-9, 10-19 employees, etc.) requires EMPSZ-filtered data. This analysis uses average employees per establishment (EMP/ESTAB) to indicate size distribution patterns.

Business Size Distribution Varies Dramatically by Location

The Numbers: Average employees per establishment ranges from 17.5 in Texas to 9.0 in Wyoming—a 1.9x difference. This means Texas has 1.9x larger average business sizes than Wyoming, indicating very different size distribution patterns.

So What? Different locations show dramatically different business size distributions, indicating vastly different market structures and competitive dynamics. Understanding these patterns helps you identify where business size structure matches your competitive strategy.

How to Use This: If you’re targeting markets with larger average business sizes, markets with high average employees per establishment (15+ per establishment) like Texas (17.5) and Ohio (19.5) indicate larger average business sizes. Target these markets for access to different competitive dynamics.

Size Distribution Reveals Market Structure

The Numbers: States like Texas (17.5 employees per establishment), Ohio (19.5), and Pennsylvania (18.1) have the largest average business sizes, indicating different market structures and competitive dynamics.

So What? Size distribution indicates market structure. Markets with higher average business sizes typically have different competitive dynamics, potentially more established businesses, and different market structures than those with smaller average sizes.

How to Use This: Target markets where business size distribution matches your competitive strategy. Markets with larger average business sizes (15+ per establishment) offer different competitive dynamics than those with smaller average sizes (<12 per establishment).

Location Strategy Must Account for Size Distribution

The Numbers: The difference between the largest average business size state (Ohio, 19.5 employees per establishment) and smallest average business size states (Wyoming, 9.0) is 2.2x, meaning dramatically different size distributions and market structures.

So What? Business size distribution directly impacts your competitive position. Markets where business size distribution matches your competitive strategy offer appropriate market structures. Your location choice should prioritize markets with size distributions that match your business model.

How to Use This: For businesses requiring specific competitive dynamics, target markets where business size distribution matches your competitive strategy. Markets with larger average business sizes (15+ per establishment) offer different competitive dynamics than those with smaller average sizes.

Red Flags

• Size Distribution-Business Model Mismatch: Markets where business size distribution doesn’t match your business model may create competitive disadvantages
• Very Small Average Business Sizes (<10 employees per establishment): May indicate limited market structure and lack of established businesses
• Declining Average Business Sizes: Markets where average business sizes are decreasing may signal market structure decline

Green Lights

• Larger Average Business Sizes (15+ employees per establishment): Indicates larger average business sizes with different competitive dynamics and market structures
• Size Distribution-Business Model Alignment: Markets where business size distribution matches your business model offer appropriate competitive dynamics
• Consistent Size Distribution: Markets with consistently appropriate size distributions offer stable competitive dynamics
• Diverse Size Distribution: Markets with diverse size distributions offer flexibility and multiple competitive positioning options

How to Use This Data

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

Step 1: Identify Size Distribution Patterns for Your Industry

Compare average employees per establishment across states for your industry (NAICS code):

• State-level: Get broad size distribution identification
• Industry-specific: Use NAICS-filtered data for your specific industry
• Size Distribution Ranking: Rank states by average employees per establishment to identify size distribution patterns

Action: Create a spreadsheet with all 50 states. List average employees per establishment for your industry in each. Rank by size distribution to identify markets with appropriate size structures.

Step 2: Assess Size Distribution Benefits

Size distribution indicates market structure and competitive dynamics:

• Market Structure: Different size distributions indicate different market structures
• Competitive Dynamics: Markets with larger average business sizes have different competitive dynamics
• Business Model Fit: Size distribution should match your business model and competitive strategy

Action: For each candidate market, assess size distribution benefits. Identify markets with size distributions that match your competitive strategy and business model.

Step 3: Evaluate Size Distribution vs. Competitive Strategy

Balance size distribution benefits with your competitive strategy:

• Larger Average Business Sizes, Established Competition: May offer different competitive dynamics but also more established competition
• Moderate Average Business Sizes, Balanced Competition: Offers best balance of competitive dynamics
• Smaller Average Business Sizes, Less Competition: May offer less competition but also different market structures

Action: For each candidate market, evaluate size distribution vs. competitive strategy. Choose markets that offer size distributions with appropriate competitive dynamics.

Step 4: Choose Your Size Distribution Location

Select markets with size distributions that match your business needs.

Action: Create a decision matrix scoring each location on: size distribution fit (40%), competitive dynamics (30%), and market structure (30%). Choose the location with highest score.

Step 5: Make Your Location Decision

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

Action: Create a final decision matrix scoring each location on: size distribution fit (30%), competitive dynamics (30%), business climate (20%), and market size (20%).

Common Use Cases

Scenario 1: Seeking Larger Average Business Sizes → Focus on markets with larger average business sizes (15+ employees per establishment). These markets offer different competitive dynamics and market structures.

Scenario 2: Balanced Size Distribution → Target markets with moderate average business sizes (12-15 employees per establishment) that offer balanced size distribution with mix of small and large businesses.

Scenario 3: Smaller Average Business Sizes → Consider markets with smaller average business sizes (<12 employees per establishment) that may offer different competitive dynamics with more small businesses.

Scenario 4: Risk-Averse Strategy → Focus on markets with moderate-to-large average business sizes (12-15+ employees per establishment) that offer proven size distributions with stable competitive dynamics.

Questions to Ask Yourself

• How important is business size distribution vs. competitive dynamics for my business?
• Do I need larger average business sizes (15+ per establishment) or is moderate size distribution (12-15) sufficient?
• What size distribution benefits do I need—market structure, competitive dynamics, or business model fit?
• Am I entering a validated size distribution market or an emerging one?

Action Items Checklist

• Identify size distribution patterns for your industry by ranking states by average employees per establishment
• Assess size distribution benefits (market structure, competitive dynamics) in candidate markets
• Evaluate size distribution vs. competitive strategy for each candidate market
• Research size distribution dynamics and competitive positioning in candidate markets
• Compare size distribution benefits with business climate and market size
• Create a decision matrix scoring each location on size distribution fit, competitive dynamics, and market structure
• Consult with Business Initiative for establishment size distribution analysis and location strategy guidance

Industry-Specific Recommendations

Professional Services (NAICS 54): Target markets with moderate-to-large average business sizes (12-15+ employees per establishment). Professional services benefit from balanced size distributions with mix of small and large businesses.

Technology Services (NAICS 51): Focus on markets with moderate average business sizes (12-15 employees per establishment). Technology businesses benefit from balanced size distributions with competitive dynamics.

Retail Trade (NAICS 44-45): Look for markets with moderate average business sizes (12-15 employees per establishment) for retail. Retail businesses benefit from balanced size distributions.

Manufacturing (NAICS 31-33): Prioritize markets with larger average business sizes (15+ employees per establishment) for manufacturing. Manufacturing businesses benefit from larger average business sizes with different competitive dynamics.

Health Care (NAICS 62): Consider markets with moderate-to-large average business sizes (12-15+ employees per establishment) for health care. Health care businesses benefit from balanced size distributions.

Common Mistakes to Avoid

Mistake 1: Using Only Average Employees per Establishment Without EMPSZ Data Average employees per establishment shows size distribution patterns but doesn’t reveal full size category breakdown. Always use EMPSZ-filtered data when available for full size category analysis.

Mistake 2: Ignoring Competitive Dynamics in Size Distribution Analysis Size distribution shows market structure but doesn’t reveal competitive dynamics. Don’t ignore competitive dynamics—different size distributions have different competitive implications.

Mistake 3: Not Considering Industry-Specific Size Distributions Overall size distribution doesn’t reflect your industry’s specific size patterns. Always use NAICS-filtered data for your specific industry to assess size distribution.

Mistake 4: Overlooking Business Model Fit Size distribution shows market structure but doesn’t reveal business model fit. Don’t overlook business model fit—your business model should align with size distribution.

Mistake 5: Not Validating with Market Research Size distribution data shows patterns but doesn’t reveal competitive positioning, market dynamics, or business model fit. Always validate with market research and local analysis.

Optimization Strategies

For Maximum Size Distribution Benefits: Target markets with larger average business sizes (15+ employees per establishment) that offer different competitive dynamics and market structures.

For Balanced Approach: Focus on markets with moderate average business sizes (12-15 employees per establishment) that offer balanced size distribution with mix of small and large businesses.

For Smaller Average Business Sizes: Consider markets with smaller average business sizes (<12 employees per establishment) that may offer different competitive dynamics with more small businesses.

For Risk-Averse Strategy: Prioritize markets with moderate-to-large average business sizes (12-15+ employees per establishment) that offer proven size distributions with stable competitive dynamics.

Timing Considerations

Best Time to Enter Larger Average Business Size Markets: When you have resources ready and competitive positioning complete. Larger average business size markets reward businesses that can leverage different competitive dynamics.

Best Time to Enter Smaller Average Business Size Markets: When you have small business positioning and can serve smaller market structures. Smaller average business size markets reward businesses that can leverage different competitive dynamics.

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

Resource Recommendations

For Size Distribution Analysis:

• Census Bureau County Business Patterns (official CBP data source)
• NAICS code lookup tools (identify your industry classification)
• EMPSZ-filtered data (full size category breakdown when available)
• State economic development websites (local size distribution insights)

For Location Support:

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

For Size Distribution Research:

• Combine CBP establishment and employment data to assess size distribution
• Research local size distribution dynamics and competitive positioning
• Consult with Business Initiative for personalized establishment size distribution analysis and location guidance

FAQs - Frequently Asked Questions About The Establishment Size Distribution: Business

In Summary

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

Key Findings:

• Business size distribution varies dramatically by location—average employees per establishment ranges from 19.5 in Ohio to 9.0 in Wyoming (2.2x difference)
• Size distribution reveals market structure—markets with higher average employees per establishment (15+ per establishment) indicate larger average business sizes with different competitive dynamics
• Location strategy must account for size distribution—choosing markets where business size distribution matches your competitive strategy provides access to appropriate market structures
• Larger average business sizes offer different competitive dynamics—markets with larger average business sizes (15+ per establishment) offer different competitive dynamics and market structures
• Balanced approach often offers best opportunity—markets with moderate average business sizes (12-15 employees per establishment) offer balanced size distribution with mix of small and large businesses

What This Means for Your Business: Understanding establishment size distribution helps you identify where business size structure matches your competitive strategy, assess market structure differences, and make strategic location decisions. Markets with different size distributions offer different competitive dynamics and market structures. The best approach balances size distribution fit (appropriate market structure) with competitive dynamics and business climate.

Practical Applications:

• Location Strategy: Use size distribution data to identify markets where business size distribution matches your competitive strategy (larger average sizes for established competition, smaller for less competition)
• Market Analysis: Compare size distribution across locations to understand market structure and competitive dynamics
• Competitive Positioning: Target markets with size distributions that match your business model for appropriate competitive dynamics
• Strategic Planning: Prioritize markets with appropriate size distributions (12-15+ employees per establishment) for balanced market structures

Next Steps:

1. Identify size distribution patterns for your industry by ranking states by average employees per establishment
2. Assess size distribution benefits (market structure, competitive dynamics) in candidate markets
3. Evaluate size distribution vs. competitive strategy for each candidate market
4. Compare size distribution benefits with business climate and market size
5. Consult with Business Initiative for establishment size distribution analysis and location strategy guidance

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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