Small Businesses and Their Economic Significance

Small Businesses and Their Economic Significance

Since 1993, the US Small Business Administration (SBA) has promoted National Small Business Week to honor up and coming small businesses and entrepreneurs that play a critical role in the economy, both nationally and for local communities. The event highlights some of the factors that make up the roles of small businesses, as well as the issues they face and the solutions they implement.

1. Contributions to the Nation’s Workforce

By the numbers, the value of small business makes itself apparent, both in terms of workers employed and production. The SBA projects that: Roughly 66% of Americans of working age are employed by or own a small business; Small businesses with fewer than 50 employees, altogether, contribute about 70% of the US’s gross domestic product (GDP).

2. Community Foundations

The nature of small businesses makes them invaluable to their local communities. On one level, they typically employ directly from the local population and provide an easy means to employment therein. On another, the products and services offered often place them in a niche that cements their practice and keeps consumers loyal, and local customers can trust their expertise because of a closer relationship.

3. Managing Money Flow and Staying Open

Even with their notable roles and benefits, small businesses are vulnerable to early turnover and a high attrition rate in their industries. Only about two-thirds of small businesses last at least two years, according to the SBA, with one-third total lasting a decade. Small Business Week, along with saluting these small businesses, also serves to help teach entrepreneurs and owners how to manage invoicing, debt and documentation early on and sustain their businesses.