owners who filed an IRS form 1040 Schedule C (individual proprietorship or self-
employed person), 1065 (partnership), or 1120S (subchapter S corporation).5 Only firms
with $500 or more in sales were included. The businesses included in the CBO represent
nearly 90 percent of all businesses in the United States (Department of Commerce,
1996b). Response rates for the firm and owners surveys were approximately 60 percent.
All estimates reported below use sample weights that adjust for survey non-response
The CBO is unique in that it contains information on both the characteristics of
business owners and the characteristics of their businesses. Examples of owner
characteristics include marital status, education, detailed work experience, family
business background, hours and weeks worked in the business, and health insurance.
Detailed information on how the owner acquired the business and on the sources of
capital s/he used to start or acquire the business is also available. Business characteristics
include closure, profits, sales, employment, industry, startup capital, age of business,
legal form of organization, employee composition, customer base, physical location, and
exports along with many others.
A major advantage of the CBO over other nationally representative datasets for
this analysis is the availability of measures of business ownership among family
members. In particular, the CBO contains information on business inheritances, business
ownership among family members, and prior work experience in a family member's
business. The main disadvantage is that the CBO does not contain information on a
comparison group of wage/salary workers. Therefore, we cannot directly explore the
5 Larger C corporations were not included because of the difficulty in asking owner questions for many investors. C corporations as a tax filing status, however, are becoming less popular relative