Importance of Small Businesses in the US Economy
Small businesses are vital to the US economy. According to the SBA, there are 30.7 million small businesses in the US, which account for 99.9% of all US businesses.
Let’s take a look at some of the reasons why small businesses are truly the backbone of the US economy:
Entrepreneurs compete to be unique and innovative, whether they are finding new ways of doing old things or addressing a need in their local communities. They also need to do these tasks better than their competitors. Because small businesses tend to lack the resources that most large businesses would have, both the employer and employees must be innovative and creative in order for the business to thrive.
Small businesses have been major drivers of job growth in the US for decades, creating 1.5 million jobs annually. They employ almost 50% of the entire U.S. workforce.
More Opportunity for Minorities, Women, and Immigrants
Business ownership allows all kinds of people, from women to immigrants to minorities, to significantly contribute to the economy and achieve financial independence. There are approximately 1.1 million minority-owned small businesses in the US and the communities in which these minority entrepreneurs operate their small businesses have prospered due to the positive impact they have on their local communities.
Local Community Development
Small businesses are integral to the local economy as they create a financial interdependence framework that fosters prosperity among local community members. When you spend money at a local small business, that money is used to pay the worker, who, in turn, is likely to spend that money at another local business.
Small businesses also contribute to local community development through tax payments to the local government. When local residents shop at small businesses within their local small businesses, their tax dollars stay within the local economy. The more frequently the residents patronize their local small businesses, the greater the tax revenue will be for the local government. The local government can use the taxes paid by small businesses to improve the local community.
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