Every day, on our way to work, to college, to the gym, while we walk our dogs or while we have a stroll with our loved ones, we pass by various small businesses. Bakeries, barber shops, cafes, drug stores, retail stores, hair salons, grocery shops, deli shops and other, often family run, firms. We consider them to be a part of our every day surroundings. A part of our community and everyday lives. But little do we know, those small, often family run businesses are the bread and butter of the whole economic system. Their existence in our everyday lives is not something to be taken for granted.
What exactly is a small business you ask? A small business is an entrepreneurship that is run and owned by a private person. Such businesses usually have a small amount of people employed. More accurately, in the United States of America, small business is one which includes a certain number of workers or a certain annual income. Under those two criteria are the following:
Manufacture with a maximum number of workers from 500 to 1500
Wholesaling with a maximum number of workers from 100 to 500
Services which have an annual income from $2.5 to $21.5 million
Retailing that has an income from $5.0 to $21.0 million
General and Heavy construction which annual income cannot surpass $13.5 to $17 million
Special Trade Construction where annual income cannot go over $7 million
Agriculture business which annual income can be from $0.5 to $9.0 million
Ok, now that we have clearly defined what small businesses are, let’s find out, why they are considered to be the engines of a prosperous economy. If you are not an expert in economics, the importance of a small business may come to you as something not so obvious. Because of the very fact the small businesses are, well, small. So, at first, it may be hard to see the value of their role in the economy. But you know what they say? Often very powerful things come in very small packages. And that is exactly the case with the impact of small businesses on the economy of the United States.
Between 25 and 27 million of small entrepreneurships are responsible for the existence of 60 to 80 percent of jobs in America. Small businesses have a 50 percent success of maintaining in the first years since the founding. Also, some recent studies have shown that small businesses give more patents than bigger companies. We may all think that the big companies are the ones that drive the economy. But, in fact, over half of the country’s working population is employed by a small business firm. The reason for this is simple. People are naturally production orientated, they have ideas, thoughts, and they should be given a chance to put those ideas to work. The benefits of that are multiple. The economy has a new startup company. We have a factor of self-employment and the opportunity for new job positions. And the economy has another player with a certain market. Even the Obama Administration has focused on supporting the further development of small businesses.
Finally, we have established and explained the value of small businesses for the American economy. The next step would be to ensure that those entrepreneurships get what they need to grow or to get founded. What would be the resources they need so that they could survive and keep up with the volatile economy? Generally speaking, we need to provide them with the right climate in which they can successfully operate. In order to do that, small businesses should have easy access to various business advisors and capital investment funds. Also, the policy of small regulations and a less complicated tax structure could give small firms a boost. Nowadays, there are different programs and organizations around the US that provide support for the new and existing small companies. Those programs provide tools for smaller companies to become sustainable or remain sustainable and profitable. So, if you are looking to put your idea into a business venture, now would be a great time to do it.