Researchers at the John J. Heldrich Center, with funding from the New Jersey State Policy Lab, are currently engaged in a project to examine how New Jersey’s public Artificial Intelligence (AI) initiatives can better align with the evolving needs of small businesses in the state. Early stages of this work revealed a lack of a standardized definition of “small business” across agencies and levels of government, as well as limited availability of standardized public data regarding small businesses, particularly at the county level. These challenges shaped the project’s initial research design and informed the process used to select a county for deeper analysis. This blog post explores these challenges and outlines the approach used to select Middlesex County as the study’s county of focus.
While “small business” is a widely used term in policy and practice, state and federal agencies have come to define small businesses using various metrics, including firm size, revenue generation, number of locations, and even industry code. Currently, there is no standardized definition across all agencies or levels of government. The U.S. Census Bureau has explored the various metrics by which agencies and policymakers categorize small businesses (Hait, 2021). The U.S. Small Business Administration (SBA) maintains a small business size standard guide as another form of definition and guidance, particularly as it pertains to loan programs and contracting opportunities. These frameworks illustrate that there is no single definition consistently applied across institutions, complicating efforts to analyze the small business landscape in a comparable way.
To establish a definition appropriate for our project effort, researchers examined the landscape of existing definitions of small businesses across all levels of government and selected a metric that was most frequently used and measurable using publicly available datasets. For the purposes of this study, a small business is defined as any firm with <100 employees, leaving the metric for industries and revenue generation aside for future project tasks, to allow the project team to proceed with a consistent and operationalizable definition.
Subsequently, in an effort to select one high-impact New Jersey county, researchers engaged in a multi-step decision-making process. The team used the selected small business metric (any firm with <100 employees) to explore the 2022 U.S. Census Bureau’s County Business Patterns and Economic Census data. Researchers exported key data about the total number of firms with fewer than 100 employees for every county in New Jersey. Counties were then ranked from highest to lowest based on the total number of small business firms meeting this definition.
From this ranking, researchers then attempted to explore existing business demographic data, particularly measures related to women- and minority-owned business enterprises (MWBE), for five New Jersey counties with the largest number of small businesses. This exploration highlighted broader gaps in standardized, publicly available demographic data, making it difficult to systematically assess ownership characteristics at the county level using existing public sources alone. As part of this process, the research team also examined the New Jersey Selective Assistance Vendor Information (NJSAVI), the state’s procurement-oriented vendor registry that contains firm-level, self-reported information on businesses registered with the state. NJSAVI represents a valuable administrative data source, particularly for understanding businesses that engage with state procurement systems and for identifying firms that have opted into reporting demographic and certification information. While NJSAVI is not intended to capture the full universe of small businesses statewide and is not designed specifically for county-level demographic analysis, limiting its relevance to this particular stage of research, it offers important contextual insights into a subset of businesses.
Given these limitations, selecting a county required consideration beyond business counts alone. In addition to the quantitative ranking, the research team incorporated practical factors relevant to research feasibility and stakeholder engagement, including counties’ existing relationships with the Heldrich Center and Rutgers University at large.
Through this combined process, Middlesex County, home to 17,827 of New Jersey’s small businesses, was selected as the focus of the study (U.S. Census Bureau, 2022). Middlesex County maintains the second highest number of small business firms, only behind Bergen County, and, importantly, is home to the New Jersey Small Business Development Center at Rutgers University – New Brunswick, where small businesses, particularly women- and minority-owned businesses, can access business training, support, and resources to sustain their operations. Furthermore, Middlesex County’s population is generally diverse, with the highest score on the U.S. Census Bureau’s Diversity Index for counties in New Jersey (U.S. Census Bureau, 2021). Middlesex County’s unique characteristics—including its central location, proximity to key institutions, diverse population, and concentration of small business firms—contributed to researchers’ decision to examine its small business landscape in greater depth.
This selection reflects both the concentration of small business activity in Middlesex County and the presence of institutional supports that can facilitate meaningful analysis of program alignment and local business needs. More broadly, the process highlights the ongoing challenges researchers face when attempting to define and measure the small business landscape using existing public data sources, particularly when the goal is to understand how policy initiatives serve diverse communities of entrepreneurs.
References:
Hait, A. (2021 January 19). The Majority of U.S. Businesses Have Fewer Than Five Employees. United States Census Bureau. https://www.census.gov/library/stories/2021/01/what-is-a-small-business.html
U.S. Census Bureau. (2022) State by County, Data by Enterprise Employment Size. https://www2.census.gov/programs-surveys/susb/tables/2022/county_3digitnaics_2022.xlsx
U.S. Census Bureau. (2021 August 25). New Jersey Population Topped 9 Million in Last Decade. https://www.census.gov/library/stories/state-by-state/new-jersey.html#diversity