How small are small businesses? While this might sound like an open and shut sort of question (small businesses are small, everyone knows that), the reality is that small businesses have a rather large effect on our country’s economy and workforce. For instance, did you know that small businesses employ over half of America’s workforce? That’s right, if you work in this country, odds are that you’re working for somebody who’s putting their entrepreneurial vision to the test with each passing year. Though the success or failure of a particular small business doesn’t translate into the success or failure of the economy (unlike the banking collapse of 2008), the collective impact of small businesses in this country is anything but small.
The appeal of entrepreneurship is what draws many people to pursue their own small business dreams. From the thrill of a potential payout offered to startups, to the freedom of working on your ideas on your own terms, it’s no wonder that so many people in this are still trying to make their small business vision into a reality. According to GetBusy Media, there are currently 28 million small businesses operating in the US right now, 22 million of which are non-employer businesses (has no paid employees, has annual business receipts of $1,000 or more, and is subject to federal income taxes). These 22 million non-employer businesses are mostly self employed people, a development due in a large part to the role that internet plays in the modern business environment. Where 10 years ago you might have needed an office and several employees to get your small business off the ground, today, with the development of cloud computing and the abundance of contractors, a 1 man or woman business has never been easier to manage.
So just how important are small businesses for the economy? Well, according to the same GetBusy Media article, small businesses have been responsible for creating 65% of all the new jobs in this country since 1996. Currently, there are over 540,000 businesses founded each month, with a failure rate of about 50% after the first 4 years. Besides the fact that small businesses have been doing the lion’s share of hiring since Clinton was in the oval office, small businesses also account for a large portion of our country’s total revenue. According to this article from BizFilings, the total revenue for small businesses in the US in 2012 was 7.8 trillion, or 20% of the country’s total revenue.
One of the largest changes coming to the small business landscape is the rising prevalence of “micro-businesses.” According to GetBusy Media, “From 2004 to 2010, U.S. micro-businesses (1 to 4 employees) created a net of 5.5 million jobs; large businesses (those with greater than 500 employees) lost 1.8 million jobs during the same period.” President Obama has called small business “the backbone of our economy,” and, judging by all of these facts and figures we’ve been throwing around, it’s the truth. With over half of the country’s livelihood tied in one way or another to small business, it’s plain to see why our country has such a strong tradition of innovation and entrepreneurship.