Every November just as holiday shopping reaches a critical mass, we are reminded of the vital role small businesses play in our economy on Small Business Saturday. With the proliferation of large box stores and many mid-sizes businesses merging to create massive competition in many industries it’s important that we take a moment and recognize the value small businesses offer.
What Constitutes a Small Business Today?
Oddly enough, the definition of a small business has actually grown in recent history. Currently, a small business is defined as a business with less than 500 employees according to the Small Business Administration (SBA). There are approximately 22.9 million small business in the US;53% of which are a home-based business. In addition, small businesses account for 99% of all employers in the US, employing over 56 million people.
Advantages of Small Business
While many large corporations excel at manufacturing and delivering products and services to the masses, small businesses play a different but equally important role in our economy. Here are some of the great advantages and benefits of small business.
Enriching the Local Community
Small businesses cultivate their workforce and typically reside within the communities they serve. They contribute to helping the local economy prosper and provide jobs, security, and comparable products and services to many large corporations at affordable prices.
Innovation is Often Born Through Small Business
Many of the greatest products we love today were created by small businesses. For example, Apple, Hewlett-Packard, Amazon, Google, and The Walt Disney Co, all began as small businesses. Innovation within the small business sector is massive. Recent data tells us that 16x the number of patents are filed per employee within a small business as they are in a larger corporation and 43% of all high-tech employment comes from small business.
As we’ve seen over the last few months in the presidential debates, the discussion of many corporations sending American jobs and American manufacturing overseas is a hot button issue. Small businesses are combatting this trend and make up 97% of all exports in our economy. This statistic makes a strong case for the quality and value small business brings to market.
Diversity and Culture
As our society becomes more culturally diverse, small businesses are leading the charge and creating greater opportunity for minority groups to find greater success in business. In a short span of 5 years, the percentage of minority-owned businesses nearly doubled from 2007 to 2012 to roughly 15%. Women-owned businesses have also increased to 36%, and veteran-owned businesses make up nearly 10% of all small businesses.
Small Business Challenges
Unlike a large corporation which can easily raise capital for new investments or business ventures, a small business rarely has this opportunity. Over the last decade, small business growth has declined which has been attributed to lending challenges they face. This challenge forces many business owners to fund or expand their business through personal savings.
To help offset this struggle, the SBA has partnered with many lending institutions to provide more accessible funding options for small businesses. In addition, the SBLF (Small Business Lending Fund) has also been established to provide capital to local banks, providing greater accessibility for growth.
Small businesses also struggle with creating a strong, reliable, customer experience consistently. For example, facing periods of growth or losing a key employee can drastically impact the customer experience. By comparison, large businesses have developed a massive network of interconnected services and processes to deliver a uniform experience for all customers. It takes a massive disruption in “business as usual” for a large company to drop the ball.
Support Local Business November 26th
Small business drives the US economy generating two out of every three jobs and nearly 43% of US payroll dollars. As a New Jersey small business with nearly four decades of business ownership under our belts, we know all about and value the critical role small businesses play in our local community. We are proud members of the Tri-Boro Area Chamber of Commerce and work with hundreds of local businesses who need help with printing services, custom business forms, and promotional products.
On Saturday, November 26th, help our local community flourish by shopping local! We support small business and hope everyone continues to support local business not just on Small Business Saturday but all year long.