📊 Small Business Profiles for Major Metropolitan Areas of the Midwest 2025: Key Economic Insights

The “Small Business Profiles for Major Metropolitan Areas of the Midwest 2025” report, published by the U.S. Small Business Administration’s Office of Advocacy, provides a detailed look at the state of small businesses across the Midwest’s largest metropolitan areas. This report uses the latest government data to highlight the scale, composition, and trends of small businesses—defined as firms with fewer than 500 employees—in cities such as Chicago, Detroit, Minneapolis, Indianapolis, Cleveland, and others. The findings are crucial for understanding the economic landscape of the Midwest and the role small businesses play in regional employment, income, and industry dynamics.

Key Findings and Trends 📌

  1. Prevalence and Economic Impact of Small Businesses
    • 🏢 Small businesses make up the overwhelming majority of firms in every major Midwest metro area, typically accounting for 98% to 99.6% of all businesses.
    • 👥 They employ between 40% and 48% of the metropolitan workforce, with some variation by city. For example, in Chicago-Naperville-Elgin, small businesses employ 44.6% of workers, while in Detroit-Warren-Dearborn, the figure is 47.2%.
  2. Employment and Growth Patterns
    • 📈 In most metros, the number of small business employers and their total employment increased between 2012 and 2022. For instance:
      • Chicago saw small employer numbers rise from 192,168 to 200,613, with employment growing from 1.8 million to 1.9 million.
      • Minneapolis-St. Paul-Bloomington’s small business employment rose from 765,227 to 843,368.
    • 📉 However, some areas, such as Cleveland and Toledo, experienced declines in both the number of small employers and small business employment over the same period.
  3. Industry Composition
    • 🏥 The industry with the most small business employment is often Health Care and Social Assistance (e.g., 255,608 employees in Chicago, 149,031 in Minneapolis).
    • 🚚 In terms of the number of small businesses, sectors like Professional, Scientific, and Technical Services, and Transportation and Warehousing are frequently the largest.
    • 🍽️ In some metros, Accommodation and Food Services is a leading employer among small businesses (e.g., Toledo).
  4. Self-Employment Trends
    • 💼 The share of self-employed workers is rising across the Midwest, with most metros seeing increases of 0.5 to 1.2 percentage points from 2018 to 2023.
    • 💵 Median incomes for the self-employed have also grown significantly. For example, in Indianapolis, the median income for incorporated self-employed individuals rose 33.4% to $83,614 between 2018 and 2023.
  5. Regional Variations
    • 🌆 Larger metros like Chicago and Detroit have the highest absolute numbers of small businesses and employees, but smaller metros such as Akron and Des Moines still show high proportions of small business activity relative to their size.
    • 🏭 The mix of industries varies by city, reflecting local economic strengths—manufacturing in some, services in others.

Economic Context and Implications 💡

  • The Midwest’s small businesses are a backbone of regional employment and economic resilience. Their dominance in the business landscape means that shifts in small business health have outsized effects on local economies.
  • The growth in self-employment and rising incomes for the self-employed suggest increasing entrepreneurial activity and possibly a shift toward more flexible or independent work arrangements.
  • The variation in growth trends—some metros growing, others declining—highlights the importance of local economic conditions, industry mix, and demographic trends.
  • The report’s findings align with broader national trends seen in other economic reports, such as the Business Employment Dynamics and Productivity by State reports, which show that small businesses are key drivers of job creation and economic dynamism, but also face unique challenges in periods of economic transition.

Summary

The 2025 Small Business Profiles for Major Metropolitan Areas of the Midwest show that small businesses are vital to the region’s economic health, employing nearly half of all workers and dominating the business landscape. While most metros have seen growth in small business employment and self-employment income, some areas face stagnation or decline, reflecting broader economic shifts. The industry composition varies, but health care, professional services, and transportation are consistently important. These insights are essential for understanding the Midwest’s economic trajectory and the challenges and opportunities facing its small business sector.

References: 

Small Business Profiles for Major Metropolitan Areas of the Midwest 2025, U.S. Small Business Administration

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