Celebrating Small Businesses in May and Every Day
Small business has been called the backbone of the U.S. economy” — for good reason. Now 33.2 million strong, small businesses — defined by the U.S. Small Business Administration as independent businesses with fewer than 500 employees — make a tremendous impact on the U.S. economy and workforce. According to the U.S. Chamber of Commerce, small businesses:
- Account for 99.9% of all U.S. businesses
- Created 63% of new U.S. jobs from 1995 to 2021 (17.3 million new jobs)
- Employ nearly half (46%) of America’s private-sector workforce (61.7 million workers)
- Represent 43.5% of gross domestic product (GDP)
In other words, there's a lot of power packed into small businesses. Here are some areas where small businesses excel.
Creating jobs and job satisfaction
Over the past quarter-century, small businesses have built a reputation for playing a vital role in the nation’s employment picture. Creating more than 17 million new jobs during this time period, small businesses have represented nearly two of every three jobs added to the U.S. economy.
What’s more, research conducted over recent years often reflects a higher level of job satisfaction among small business workers and their large business counterparts. For example, people working in companies of 10 or fewer employees reported the highest levels of happiness in a 2016 Robert Half study of more than 12,000 U.S. and Canadian workers. Those working in organizations of 10,000 or more employees reported the lowest levels of happiness.
Similarly, PwC research revealed that people working for companies of fewer than 50 employees reported feeling happier and more engaged than their peers in 1,000+-employee companies. Notably, 43% of the small business workers said they felt happy at work versus 27% of those working at large firms.
What is it about small businesses that so many people prefer? Broadly speaking, employees working for smaller companies embrace the experience of feeling like more than a number. Small business leaders may be more likely to:
- Value and show apprecication for employees' individual contributions
- Give individuals the opportunity for greater input, which can enable them to make a greater impact
- Get to know employees' personal values, priorities and work preferences — all of which can help mold company culture, including creating better work life-balance through flexible work policies
Why focus on employee happiness? Businesses with happy employees benefit from the positive work environment as well as greater productivity, creativity and collaboration. These firms are also more likely to attract and retain top-level talent.
Communities across the nation benefit from the presence and activities of small businesses. Small companies are known for creating local jobs, keeping cash circulating through the economy, serving in civic leadership roles and otherwise promoting the stability and well-being of communities. Yet even with all of that, small businesses make an even greater impact when viewed collectively.
Taking a more sweeping look at small business, these companies of 500 or fewer employees represent 43.5% of the national GDP. They are a formidable growth engine, providing goods and services not only in the U.S. but also for consumption in foreign countries. The U.S. Chamber reports that small businesses represent 97.3% of all exporters and 32.6% of known export value ($413.3 billion). Their influence on global commerce is powerful.
Giving entrepreneurs the opportunity to soar
The phrase “Do what you love” drives a lot of Americans to start their own businesses. Maybe they have a great idea they want to bring to life, or they have the philosophical confidence that when you do something you’re passionate about, the money will follow. Others may look at entrepreneurism from a strictly pragmatic perspective: They’re tired of working for someone else, and they have the knowledge they feel they need to be successful.
Whatever their motivation for choosing the entrepreneurial route, 33.5 million Americans told the Global Entrepreneurship Monitor in 2021 that they were starting or running new businesses. Another 18 million said they were running established businesses. Together, these 51.5 million entrepreneurs represent 16.5% of the U.S. adult workforce. This number continues to grow, as a record-breaking 5.4 million new business applications were filed in the U.S. in 2021, following a robust 5.1 million applications in 2020.
Interestingly, the recent GEM research revealed that entrepreneurism, historically the domain of middle-aged individuals with substantial work experience, resources and networks, is now of growing interest among 18- to 24-year-olds. This bodes well for the long-term promise of small businesses. As interest, intention and motivation are handed down from generation to generation, small businesses will continue to proliferate and carry out their vital role in our nation’s economy.
This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.
Posted: May 09, 2023