Small Business and the Economy
As businesses big and small are all struggling to get back up on their feet after the shutdown, it saddens me to see some of them close their doors.
Ever wonder why small businesses are so important to your local economy?
How Small Businesses Affect the U.S. Economy
They contribute 65% of all new jobs.1
Congressional Research Service. "Small Business Administration and Job Creation," Page 5, Table 3. Net Employment Change from Small Establishments, 2010-2018. Accessed June 4, 2020.
Without small businesses, the economy won't grow.
The Congressional Research Service found that the best job creators were firms with 20-499 employees. They are more likely than smaller firms to remain in business after five years. At least half of all new start-ups fail before that milestone.
The vast majority of companies in the United States are very small businesses. In fact, 96% have 50 or fewer employees. That's 5.8 million out of 6 million total companies. Yet, they employ just about 34 million workers.
In a conversation about the value of small business for the U.S. economy, we can't leave out this truth--all businesses start small. All of the 18,500 businesses in the United States with 500 or more employees once began as a part of the small business sector. Apple started in Steve Jobs's garage. Facebook got its start in Mark Zuckerberg's dorm room. Home-based, non-employing small businesses become small employers, which in turn become big businesses. So, in a way, one could argue that the American small business economy is the American economy. It's where the U.S. economy begins.
Not all are brave enough to leave a comfy weekly paycheck to venture out on their own and risk everything to make their vision a reality. Honestly, not everyone should, owning a small business just isn't for everybody. For those of us that do, we sometimes struggle with thoughts and fears of failure. Those thoughts and fears, actually keep us working longer hours, and keep us focused on moving forward. Constantly, pushing (sometimes clawing) forward.
More and more, small business ownership is reflecting the diversity of the United States. As of 2012, 14.6 percent of small business owners were minorities, compared with 11.5 percent in 2007. This includes 2.3 million Hispanic-American-owned businesses, 1.9 million African-American-owned businesses, and 1.6 million Asian-owned businesses.
This diversity is also reflected in the 36 percent women business owners, and the 9 percent of small businesses owned by veterans. Although we're a long way from small business ownership being equally representative of the American population, this is evidence of the value and potential of the small business economy for minority groups.
I truly feel like someone out there, in this new Covid world needs to be reminded, needs to know, you are so important to our economies recovery. Maybe I just needed to think through and remind myself, either way I hope it helps.
In conclusion, Small businesses are critical to U.S. economic growth.
I hope this article does help someone out there stay focused or maybe it enlightened someone on why they should do business locally and with a small business.
Site Sources and Quotes: 1) Thebalance.com - Small Businesses and Their Impact on the economy