The Office of Advocacy defines a small business as an independent business with less than 500 employees. Few of us are aware of the impact small businesses produce on our economy. Small businesses:
- Represent 99.7% of all employer firms
- Employ half of all private sector employees
- Pay 44% of total U.S. private payroll
- Create more than half of the nonfarm private GDP
- Hire 43% of high-tech workers (scientists, engineers, computer programmers, etc.)
- Made up 97.5% of all identified exporters and produced 31 % of export value in FY 2008
- Produce 13 times more patents per employee than large patenting firms
People who own and operate their own business often take pride in their work and as a result, their efficiency is very high. They provide their customers personalized and high-quality products or services. This can be demonstrated by comparing a temporary employee in a big company with a small-business employee. If an employee in a big company is hired for 40 hours a week, for example, he or she may not give the company 40 hours of production. It is difficult to monitor employees in big companies and part of those 40 hours can be spent on orientation, gathering office supplies, getting the computer turned on and paper loaded, etc. The independent entrepreneur usually does not pay per hour, but according to how much work is completed. They also usually charge less money than big companies for the same services or products.
During the 1980s and through the 1990s, the United States saw a growth in minority-owned businesses. However, most experts agree that minority-owned businesses face challenges that their white counterparts are able to avoid. Some factors that might influence the growth of minority-owned businesses are community support, increased networking, training programs, access to financing, and higher levels of education. Many do not see community support as essential but it plays a big role because entrepreneurial minorities benefit by instituting businesses within their communities that meet needs of that community. Community banks were among the most visible supporters of minority entrepreneurs in the 1980 and 90s. Their support today could greatly impact the emergence of new minority-owned business.
Small businesses accounted for 65% of the 15 million net new jobs created between 1993 and 2009. “Small business drives the American economy,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy in a press release. “Main Street provides the jobs and spurs our economic growth. American entrepreneurs are creative and productive, and these numbers prove it.” Investing in small businesses will greatly benefit the economy and the U.S. should begin by giving minorities the tools to create their own businesses.
by Betty Diop (Re:LIFE Writer/Columnist)
B.A. Applied Psychology