Reasons Why Small Businesses are so Important

You might own a small business and feel overwhelmed by the multinationals you’re competing with.  It can be easy to think that your company doesn’t have a large impact on your country’s economy.  The truth is, however, that small businesses are actually the backbone that the economy is built upon.  Almost half of the total working population in the US is employed by a small business.

When looking at the numbers, it becomes very apparent how important small businesses are for the economy in the US.  We’ve listed some of the numbers to give you an idea how essential and irreplaceable they are.  Most small businesses will never grow out of the shadows of their multinational competitors but they do bring in a lot of money to the government and stimulate employment by a great deal.

 In 2015, there were over 28 million small businesses in the US.  About a third of all companies fall into the category of a small business.  Together, these businesses make up for more than 50 % of all sales.

Over 5.5 million small businesses have employees. The effects of this on the country’s employment rate are very large, making small businesses crucial for the economy.  Although a fifth of small businesses are either a one man company or don’t hire employees, the overwhelming amount of small businesses that do hire employees make up for it.

Small businesses created nearly 15 million new jobs in the US from 1993 to 2013.  No country can do without a healthy job market and a lot of small businesses together can do a lot more than a few large companies can.  In fact, almost half of the entire payroll in the US, is paid by small businesses.

Every 8 minutes a small business went bankrupt during 2009’s recession.  Small businesses took a hard hit when the economy went bad.  During times of hardship, the company with the largest reserve will end up being the winner.  Because small businesses have a much smaller revenue than their larger competitors, building up a reserve is not always an option.

30% of small businesses don’t last longer than 5 years.  This is not a very hopeful statistic for small business owners.  You’ll have the odds against you when starting a business but those with a good idea and strategy will always stand out and have a chance of success.

Half of all small business owners want the government to give them more support.  There is not a lot of financial stimulation available to small business owners that are just starting out.  This can be a bit frustrating for these entrepreneurs, as these types of businesses do so much good for the country’s economy.

Most small businesses spent less than 6% of their revenue on marketing.  The first few years are usually the toughest for small businesses and will make or break them.  This leaves very few resources left for marketing purposes.  This can be a big problem because gaining familiarity for your business is especially important in the starting years.

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Photo Credits: Small Business, Store, Booth / Photo by Joe The Goat Farmer via Flickr / CC BY-SA 3.0