Small businesses are the backbone of America.
By William Bruce
Small businesses are often referred to as the backbone of the American economy, and for good reason. These businesses play a crucial role in fostering innovation, creating jobs, and contributing to the country’s overall economic health.
As a business broker for many years, I’ve had an enjoyable career interacting with many business owners and business buyers. I’ve learned a lot from these experiences.
So, let’s briefly examine seven ways small businesses are essential to our country.
Job Creation
Job creation is one of the most significant contributions of the small business sector. According to the U.S. Small Business Administration (SBA), small businesses account for 99.9% of all businesses in the United States and employ nearly half of the private workforce.
Surprising, huh?
And this means that millions of Americans rely on small businesses for their livelihoods. In many cases, small businesses are the primary source of employment in local communities, especially in rural areas where large corporations may not have a presence.
Innovation and Competition
Small businesses are often at the forefront of innovation. With fewer bureaucratic hurdles and a closer connection to their customers, small businesses can quickly adapt to changing market conditions and introduce new products and services. This agility fosters a competitive environment that actually drives larger companies to innovate as well.
Many of the technological advancements and consumer products we enjoy today originated from small businesses and startups.
Economic Diversification
Small businesses contribute to economic diversification by operating in a wide range of industries. This diversification is crucial for economic stability, as it reduces the risk of economic downturns affecting the entire economy. When one sector faces challenges, others can continue to thrive, providing a buffer against economic shocks.
Small businesses also help to diversify local economies, making communities more resilient to changes in the national or global economy.
In my hometown community, small businesses provide everything from horseback riding lessons to the local favorite of seafood gumbo!
Community Development
When you “shop local,” you’re supporting these valuable contributions.
Economic Growth
The cumulative effect of small businesses on the economy is substantial. They contribute to GDP growth by generating revenue, paying taxes, and stimulating demand for goods and services. The SBA reports that small businesses create two out of every three new jobs in the private sector, making them a critical driver of economic growth. Additionally, small businesses often reinvest their earnings locally, further boosting economic activity in their communities.
Opportunities for Entrepreneurship
Small businesses provide opportunities for entrepreneurship and economic mobility. They offer a pathway for individuals to turn their ideas and passions into viable enterprises.
This entrepreneurial spirit is a cornerstone of the American Dream, allowing people from diverse backgrounds to achieve financial independence and success. Small businesses also provide opportunities for skill development and career advancement, contributing to a more dynamic and capable workforce.
And remember, all big businesses started as small businesses. Microsoft did not magically materialize as this giant apparition with billions of dollars of income. As teenagers, Bill Gates and high school classmate Paul Allen started working on computer programming in the Gates family garage.
Adaptability and Resilience
Small businesses have demonstrated remarkable adaptability and resilience, particularly in times of crisis. The COVID-19 pandemic, for example, highlighted the ability of small businesses to pivot quickly, whether by shifting to online sales, offering new products, or finding creative ways to serve their customers. This resilience is essential for the economy’s overall health, as it allows for quicker recovery and sustained growth.
Conclusion
It’s an understatement to say that small businesses are indispensable to the continuing success of the United States as a world economic leader. They drive job creation, foster innovation, contribute to economic diversification, and play a vital role in community development. Their impact on economic growth and opportunities for entrepreneurship is huge.
As we look to the future, it is essential to continue supporting and nurturing small businesses in America, recognizing their critical role in building robust and resilient local economies from Georgia to Hawaii and everywhere in between!
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