In trying to increase opportunities for small business development, it might be helpful to understand the impact small businesses have on our economy. While we constantly hear about the Dow and Standard and Poor’s analysis of major publicly traded companies, there is no real index of how small businesses are performing.
However, our economy is very much dependent on the success and growth of small businesses. According to current statistics, there are approximately 29 million business entities in the United States. Of the 29 million, it is estimated that 90 percent of those businesses are considered “small.”
What is the definition of small? Some academics might say businesses with less than 50 employees, some say less than 100 employees and some say less than 500 employees. The United States Small Business Administration has a specific definition for businesses seeking loan or government set aside contracts. SBA’s size standards are based on the North American Industry Classification System Codes. In addition to meeting the industrial standards, the company must be independently owned, cannot be part of a larger enterprise or a company that sells it stock to the public and cannot be dominant in its field of operation.
However, regardless of the definition of small business, it is vital to note that small businesses contribute significantly to our economy. Approximately half of the United States’ gross domestic product is provided by small businesses. About half of all private sector jobs are provided by small businesses. Every year there has been an increase in the number of start- ups, which contributes to new jobs and many workers find their first job working for a small business.
Small business ownership gives women and minorities opportunities for advancement. Approximately 14 percent of the small businesses in the United States are owned by Hispanics, African Americans, Asians and American Indians. One of the greatest increases in small-business ownership is the number of women-owned businesses, which has reached over 6 percent of the total number of small businesses.
Many executives and top-level managers downsized from corporate America have decided to start their own businesses rather than re-enter the world of big business.
Throughout the country, colleges and universities operate incubators and small business development centers to assist and encourage students to start an independent business. It appears there is interest among people regardless of age, gender, race or culture to continue to explore opportunities of owning their own business.