Here’s Why Small Businesses Still Matter in the U.S.
The American Dream
Since its founding, America has served as a symbol for opportunity. The American Dream is perhaps best emblemized by small businesses and startups; by creating a company and participating in national and international commerce, anyone can change their circumstances. However, many people underestimate the true economic and cultural impact of small businesses. Today, we’ll discuss why these self-started companies matter – and why you should launch one now.
Small Business by the Numbers
The U.S. Small Business Administration Office of Advocacy compiled a report about the state of startups in the country. It revealed some stunning statistics.
Did you know that there are 28.8 million small businesses in the United States? That means that small businesses make up 99.7% of American companies; while large corporations dominate news cycles, the real work of influencing our economy is done by small business owners like yourself.
Small businesses recently created a net of 1.1 million new jobs, totaling 56.8 million employees (48% of the private workforce in 2013). Of the 304,223 companies exporting goods from the U.S. in 2013, 297,343 (or 97.7%) of these were small firms. They generated over 33% of America’s known export value that year.
Additionally, the report detailed which industries employ between 1 and 499 people, 1 and 19 employees, and total number of small firms.
Most popular small employer firms by industry:
- Professional, Scientific, and Technical Services
- Other Services (Except Public Administration)
- Retail Trade
- Health Care and Social Assistance
- Accommodation and Food Services
- Administrative, Support, and Waste Management
- Wholesale Trade
- Real Estate and Rental and Leasing
When sorted for total employment by industry and firm size, the list rearranges. Health Care and Social Assistance, Accommodation and Food Services, Retail Trade, and Manufacturing top the charts, employing between five and eight million people within the small business sector.
Diversity and Opportunity
Self-started companies also represent great opportunity for those looking to carve out their own niche in their industry of choice. The rate of diversity in minority ownership of small businesses has risen by 38.1% between 2007 and 2012, based on the 2015 release of the Survey of Business Owners. Total rate of minority ownership has increased by up to 46.3% among certain demographic groups; for example, the number of African American-owned businesses has jumped 34.5%, while the total number of Hawaiian/Pacific Islander-owned companies has increased by 45.3%.
This trend has emerged through a combination of necessity and opportunity. One example is the skyrocketing number of women-owned businesses since 1972. According to American Express’ 2018 State of Women-Owned Businesses Report, women are starting an average of 1,821 new U.S. businesses each day. The total number of companies founded and helmed by women is up nearly 3,000 percent.
The State of Small Business in America
Many experts believe that the health of U.S. small businesses serves as a reliable indicator of the country’s economic health. The effects of expansion and job creation seriously impact the rest of the U.S. economy.
So how do owners feel about their companies and opportunities? The answers are varied. According to the MetLine and U.S. Chamber of Commerce Small Business Index, around two-thirds of owners have a positive outlook about the economic environment and their companies. Nearly 25% of them plan to increase investment in the next year, while almost 30% want to hire more workers. However, while these statistics are optimistic, they represent a downward trend from the previous year’s survey. Plans to invest and hire have reduced, as has the overall perception of success and growth in 2019.
Why Small Business Matters
In short: locally- and family-owned companies make up over 99% of American companies and export a large percentage of goods. They’re responsible for the creation of millions of jobs in top industries, such as technical services, construction, and accommodations/food services. Their impact on the national economy cannot be understated. Additionally, they represent increased opportunity and mobility for young people and members of minority groups. With all of these factors considered, it’s obvious that small business is the backbone of America.
If you’re considering starting your own small business, we encourage you to contact Clear View Business Solutions. Our team of experts will provide you with a clear view to financial success, through a combination of loan proposals, LLC formation, business plans, and advisory services. We can’t wait to help you change the world.