Why Small Businesses Must Thrive for a Healthy Economy

Rant — By jlee on July 18, 2011 7:57 pm

We tend to think of the largest corporations as the diving force of the American economy. Yet, it’s small businesses – companies with fewer than 500 employees – that provide jobs for more than half of the entire U.S. workforce.

In recent years, we have experienced swings in the state of small business. When recession hits, employers with less than 20 employees were among the first to start shedding jobs. But as the recession fades, small business is once again coming back and flexing its muscle in the workforce. In fact, during the height of the recession, many laid off workers decided to stop looking for a new job and start working for themselves. Historically, it has been small businesses that managed to kick-start the economy following recession.

For our economy to thrive, a strong foundation of small business must exist. Small businesses are the largest job creators. While massive Fortune 500 companies shed labor to increase the bottom line, small businesses build a strong and dedicated workforce. Here are a few more reasons to look at small business as a crucial part of a healthy economy.

1. Vast Majority of Employers are Small Businesses

While just over half of U.S. workers are employed by small business, such businesses represent 97 percent of all employers. More than half of the nonfarm gross domestic product (GDP) is created by the more than 22.9 million businesses operating in the United States. Research shows that 75 percent of new jobs are created by small business.

2. Export Power

Small businesses pull in 29 percent of the country’s export revenue and 97 percent of exporters are small businesses. This shows how crucial small employers are to international business in the United States.

3. Hiring Power

More than 500,000 small businesses with employees start up every year. After four years, half of the small businesses with employees have remained open, providing stable jobs with serious growth opportunity. Small business owners and employees often develop close and meaningful working relationships and productivity increases as a result.

4. Small Business Crucial to Tech Industry

Small companies hire 40 percent of high tech workers, including scientists, engineers and computer programmers. This field is getting larger as social media and online marketing become more popular. In coming years, the population of internet users is expected to explode and small businesses are on the forefront of attracting and retaining customers and clients online.

5. A Greener Workforce

More than half of small businesses are home-based. This represents a huge population of the workforce choosing not to contribute to commute-related pollution. Those who work from home also use far less energy per capita than workers at a large building where the printer is always going and even half-empty offices are completely lit.

Small businesses have a number of advantages, including a vast support network. The Small Business Administration and other entities offer loans, grants and financial aid to aspiring business owners. Overhead startup costs are also typically much lower for smaller companies and getting the business up-and-running is much less expensive. However, running on a small budget also means less money for marketing and accounting staff. Mismanaging loans, finances and investments has brought down plenty of small businesses.

It is crucial for anyone considering a leap into the realm of business startup obtain the proper training. Many entrepreneurs choose to earn their online business degrees before jumping into a new endeavor. Even if you don’t want to spend two-to-six years in business school, it’s important to at least take some online business courses to prepare for the next step.

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• The Hidden Cost of Running an Office (infographicsshowcase.com)
• UDIG Staffing Triumph Jobs Firm Wins Coveted National ASA Award (udig.com)

Tags: business, degrees, economy, entrepreneurs, online