Hawaii ranks No. 18 for growth in tiniest firms

The Aloha State posts 4.5 percent growth in businesses that don't have paid employees

The number of small businesses without paid employees has grown in Hawaii, which ranked among the top 30 percent of all states for expansion of these burgeoning enterprises, according to new data released today by the U.S. Census Bureau.

Hawaii, which ranked 18th out of all states for growth of nonemployer firms, experienced a growth rate of 4.5 percent of so-called nonemployer businesses.

The traditional family-run corner store is getting a makeover and has given way to a variety of home and Internet-based businesses, according to the census report.

In Hawaii, the growth of these type of businesses is only natural as the high cost of labor, real estate and property rentals, as well as the tight labor market, have made flying solo more attractive to businesses that can swing it, said Jane Sawyer, spokeswoman for the U.S. Small Business Administration's Hawaii District Office.

"It's very expensive to have employees in Hawaii and many people feel home-based businesses are less expensive," Sawyer said."Technology and outsourcing have made it easier to reduce overhead by being a one-man show."

Nationwide, the number of businesses without payrolls grew 4.7 percent to reach 19.5 million between 2003 and 2004, according to the Census Bureau's most current data. Businesses with no paid employees comprise 70 percent of the nation's more than 27 million firms and bring in annual receipts of more than $887 billion, the report said.

Florida led the nation in the growth of these small businesses with a 7.6 percent increase between 2003 and 2004. Georgia climbed to second place with a 7.1 percent increase, while Nevada fell from first to third place with a 6.4 percent increase.

Building contractors, Internet providers, nail salons, electronic shopping and mail order services, real estate, formal and costume rental and motorcycle dealers were the most prevalent types of businesses.