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Surprising Statistics About the Role of American Small Businesses



There is a bit of a misnomer in the term “small business” that might actually cause people to underestimate the impact of today’s smallest employers. Indeed, while the word “small” might apply to the number of people employed by these businesses, it ignores the fact that smaller businesses have an absolutely huge impact on the American economy. In fact, when grouped together, small businesses can often be categorized as a driving force of employment, economic recovery, and other metrics. This combined economic weight explains why so many politicians are concerned with the impact of government fees, programs, and regulations, on the smaller businesses that line main streets and fill office buildings nationwide.

For those looking to size up the sheer economic impact of small businesses and those who start them, it’s worth considering a few surprising statistics about small businesses, their creation in the United States, and their overall economic impact here and abroad.


1. Small Businesses Make Up the Vast Majority of Today’s Employers

International Data Group, more commonly known as IDC, defines small businesses as those with fewer than 100 employees, including the business’ owner and any executives or management personnel. The group further defines mid-sized businesses as those with between 100 and 1,000 employees, while larger businesses are considered those with 1,000 employees are more.


Today, only 8,000 employers qualify as large business. A further 93,000 employers are classified as mid-range businesses. The number of small businesses in the United States? 8.1 million. The Small Business Administration estimates that small businesses therefore constitute 99.7 percent of all American employers.


2. Small Businesses Are A Major Part of Employment and GDP

While many people think about unemployment in terms of the small number of very large businesses nationwide, the truth is that economic recovery and stability depends mostly on the health of small businesses from coast to coast. The Small Business Administration estimates that small businesses in this country account for between 60 percent and 80 percent of all new jobs created on an annual basis.


Furthermore, the agency has found that smaller businesses, those with fewer than 100 workers, pay 44.3 percent of America’s private payroll and contribute 50 percent of America’s gross domestic product. That means small businesses and the jobs they create are worth about $6 trillion per year.


3. Small Business Owners Almost Always Require Financing

While the amount of money contributed to the U.S. economy by small businesses is staggering, the Small Business Administration estimates that a full 80 percent of these business require some sort of financing in order to get off the ground and bring their products or services to the community. Breaking that number down, the federal agency estimates that about 55 percent of all small businesses currently have one or more business loans, capital leases, or business lines of credit.


A smaller percentage, at just 34 percent, finance their small business using credit cards targeted specifically to small business owners by major lenders. In the case of sole proprietorships and those businesses that constitute just one self-employed worker, 46 percent of people using their personal credit cards to finance their business operations.


4. It Isn’t All Bricks and Mortar for Today’s Small Businesses

The proliferation of high-speed Internet connections has been a boon to the small business community, allowing a larger number of people to work from home and sell their services using a website or an affiliated marketing partner. Today, 13.8 million people work from home as part of a small business. A full 9.7 million of those people generate a sole or primary income by operating their small business and working from home. The remaining 4 million small business owners earn at least a part-time income while working from home.


5. Minorities Groups are a Significant Part of Small Business Ownership

In the United States, members of all minority groups own roughly 15.9 percent of all business in the country, regardless of size or scope. That equates to roughly 3 million businesses, and 99 percent of those businesses are actually quite small and employer fewer than 100 people at any given time. These 3 million minority-owned small businesses account for just under $600 million in annual revenue.


Hispanic Americans own roughly 40 percent of all minority-owned small businesses, while Asian-Americans and African-Americans as a group each own just over 28 percent of these businesses. Native Americans own a smaller portion of these businesses, at 6 percent.


6. Women, Too, Represent a Significant Part of American Small Businesses

Like minority groups, women are a key part of today’s small businesses. In fact, more than 10.6 small businesses in the United States are owned by women. Those small businesses employ just over 19 million American workers, and they account for $2.5 trillion in annual revenues. Revenues are split between several key industries, with the vast majority of women entrepreneurs contributing $38 billion in annual revenue to information technology professions. A further $25 billion in annual revenue is contributed to telecommunications by women small business owners, making it clear that today’s entrepreneurs are concerned primarily with high-tech pursuits.


A Thriving Microcosm of American Diversity and Commerce

From minority ownership to creative methods of financing and work-from-home incomes, today’s small businesses are boosting economic fortunes while serving as a primary source of income for a vast number of American workers. This is undoubtedly a testament to strong government policy, a large number of high-tech opportunities, and the shared sense of determination among America’s entrepreneurs.

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