Why Small Businesses Are So Important to the Economy
Karlene Sinclair-Robinson
The opportunity to start a small business in the United States continues to increase. When an individual decides to start a business, the path to being successful can be very challenging. Depending on the type of company, the owner might elect to operate as a self-employed enterprise without ever hiring an employee. Others opt to hire to advance their company’s goals and revenue.
Regardless of what works best for the owner, understanding the concept of small business is essential to being successful in all aspects of building a financially viable enterprise. Depending on the individual’s position when starting their company, getting access to capital, hiring key personnel and being compliant based on their industry’s requirements and government regulations are all critical areas to pay close attention.
The U.S. Small Business Administration, a department of the Federal Government, determines the status of ‘small businesses.’ They set the standards for size, rules, and regulations governing minority or non-minority businesses. The department considers a small business as an independently-held, privately owned company with no more than 500 employees depending on their industry. They also keep track of changes affecting these companies from the total number of firms, actual startups, minority status, hiring, terminations, closures and more.
With 30.2M+ small businesses in the U.S., they comprise 99.9% of all firms. Yes, you read correctly! The realization that large enterprises only make up 0.1% of companies in the United States should make us understand the importance and impact small enterprises have on our economy.
These entities make up 40.8% of the private sector payroll and 97.6% of all exporting firms. Here’s a brief synopsis of the SBA’s data:
- Total Small Businesses 30.2M
- Non-Minority 19.2M
- Minority 8.0M
- Women -Owned 9.9M
- Veteran 2.5M
- Hispanic 3.3M
- Black or African American 2.6M
- Asian 1.9M
Employee/Job Status
- No employees 80%
- Paid employees 20%
- Private Sector employees 47.5%
- Net New Jobs 66%
See more data here: SBA
When a small business opens, know that it is making a difference in the overall economy. The services or products they offer can make a difference in their communities. So, be sure to support these enterprising entities! They just might become the big name you can recognize on a global level.
See more data here: SBA.gov