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The value of small businesses is often underestimated because they are small. But in fact, this absolutely does not mean that they have little influence. Small businesses have a huge impact not only on the national economy but also on the economy of their communities.
Small businesses are as unique and individual as their owners and span a variety of industries. They fuel the American dream and allow people to pursue their passion. Small businesses also enable people to achieve financial independence, create employment opportunities and encourage innovation.
While small businesses may not generate as much revenue individually as large corporations, they are still vital to the success of our economy. They help improve competition in areas that may be stale in innovation and growth and offer greater diversity in the economy. Small businesses also offer diversity and innovation to our economy, and the revenue they generate has a huge impact. We may not hear as much about small businesses in financial news, but according to the Small Business Administration, 54 percent of US sales come from small businesses. That leads to a big impact on the stock market and our GDP.
The sheer amount of small businesses in the US means there is an opportunity for a lot of jobs. In 2018, there were 30.2 million small businesses, making them 99.9 percent of all businesses in America. Small businesses are the driving force behind job creation in this country, accounting for 64 percent of net new private sector jobs and more than 49 percent of private sector employment.
Today, 8 million small businesses are owned by minorities, and 9.9 million small businesses are owned by women. And according to recent research by Thumbtack, technology is helping women and minorities achieve equal pay in the expanding local gig economy. They found that for their community of small business professionals, the strongest growth was found in home improvement, including a 73 percent growth in the number of handywomen. Thumbtack also states that while the majority of small businesses are owned by men, female owners make up 40 percent of small businesses in their online community.
Because many small businesses operate locally, their hiring of local people can have a huge impact not only on the local economy but on the overall health of a community and its people. Small businesses’ impact on the community cannot be ignored! Not only do local businesses help members of the community with more job opportunities, but small businesses also support other small businesses too. They tend to support other local businesses to purchase supplies or for financing, keeping more of that money in the local community. And many people love to shop locally, helping the local economy. The First National Bank of Omaha’s 2018 Shop, Buy Give Survey found that 69 percent of Americans prefer to support local retailers. Not only are local shoppers supporting members of their own community, but they are also able to purchase unique products that may not be found in a big box store. Additionally, one Chicago study found that for every $100 a person spends at a local business, $68 will stay in the community, compared to only $43 for every $100 spent at a chain store. Small businesses also contribute to the identity of the local community where they operate. Many small business owners participate in local organizations by sponsoring teams, participating in community events, and donating to local nonprofits. So, it’s not just an impact on the local economy, it’s also about being a member of the community and improving that community on many levels.
In summary, small businesses have a large impact on the economy, both nationally and locally. Small businesses account for more than half of sales in the US. Small businesses create jobs and allow minority groups and women to be part of the business world. They also have a big impact on their local communities, from the local economy to that community's identity. Despite their small size, small businesses are really ‘big’.
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