The Role of Small Businesses in the U.S.

Although the category may be labeled as small business, there’s nothing small about the impact these businesses have on the United States economy and workforce. But then, what do we mean when we refer to small business, and what role does it play as the proverbial backbone of the economy?

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The U.S. Small Business Administration (SBA) has set standards which companies have to meet to qualify for various aid programs, loans, and even government contracts reserved for small businesses. The eligibility requirements are reviewed periodically, but the current criteria specified for size and operation typically limit manufacturing companies to 500 employees and establish the annual receipt threshold for non-manufacturing companies at $7.5 million. More generic restrictions include the following:  the business must be for-profit, independently owned and operated, located and operated in the United States or its territories, as well as exerts minimal influence across the industry. Small businesses can run the gamut of any accepted legal framework, whether it’s set up as a corporation, partnership, sole proprietorship, or LLC. Even within those guidelines, enterprising Americans have managed to build a small business into the premier employer in the country, accounting for over 99% of companies that hire employees.

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Why are they a force to be reckoned with? What differentiates these “mom and pop” type establishments from the international juggernauts, and how do they manage to stay afloat in the face of such potentially fierce competition? While there’s no denying the volume and economies of scale that large global conglomerates can leverage offer a distinct advantage, there are a few key factors that work in a small business’ favor.

Successful small businesses have embedded themselves in the fabric of local neighborhoods and have become essential to healthy and thriving communities. Small business owners are responsible for not only creating jobs, but outsourcing work to other local vendors. This results in a cycle where an infusion of money starts coming in, and spending begins to increase across all sectors of the local population. The inevitable tax revenues offer more options for local governments to enhance the well-being of their citizens.

Surprisingly, the majority of leading-edge innovation and creativity stems from small businesses. Although the media tends to focus on the high-profile tech companies, reports show that the majority of patents are submitted by small businesses. Many brilliant minds are willing to forego the prestige of Silicon Valley in favor of small businesses that foster an environment of independent thinkers with unimpeded access to company leadership. The very nature of the small business allows for agility, with fewer employees to shift and adapt to the ever-changing tides of the market trends.

Small businesses encapsulate the American spirit. Owners are individuals with a can-do attitude who are willing to take risks to pursue their dream while making very impactful contributions to society, whether or not that’s their ultimate goal. There are so many resources to get small business owners started and help them along the way. Dealstruck Small Business Loans is an example of a lender to help with financing options, while the U.S. Small Business Administration can provide a comprehensive overview of the small business climate. No matter where you are in your journey toward becoming a small business owner, whether you’re toying with an idea or ready to open your doors, you’re not alone.