How Important is Small Business?

The answer is simple:  incredibly important.  As President Obama remarked recently:

“For in the end, it's businesses -- large and small -- that generate the jobs, provide the salaries, and serve as the foundation on which the American people's lives and dreams depend.”

The U.S. Small Business Administration’s website shares the facts on the size and importance of small business.

Small businesses:

• Represent 99.7% of all employer firms
• Employ half of all private sector employees
• Pay 45% of total U.S. private payroll
• Have generated 60% - 80% of net new jobs annually over the last decade

What role do women and minority entrepreneurs play in the economy?

• Of the 23 million firms in 2002, 17.8% were minority-owned:
  • 6.6% were owned by Hispanic Americans
  • 5.0% by African Americans
  • 4.6% by Asian Americans
  • 0.8% by American Indians and Alaskan Natives and
  • 0.1% by Native Hawaiian and other Pacific Islanders
• In 2002, minorities owned 4.1 million firms that generated $694 billion in revenues and employed 4.8 million workers
• In 2002, 6.5 million businesses were owned by women that generated $940 billion in revenues and employed 7.1 million workers

So what does this all mean and why should you care?  Well, first of all the numbers speak for themselves: small business is a huge driver of the U.S. economy.  By supporting and strengthening small business you are supporting and strengthening your local economy.  

Second, and more urgently, given the current financial situation these small business are under a great deal of stress.  Banks have tightened up their lending standards for loans and as a result businesses are unable to access credit needed to fund daily operations, let alone fund the expansion and growth needed to create more jobs.  Further, the first line of funding for many business owners – the equity in their homes – is no longer there. 

If this lack of access to credit were to persist the results would lead to business closure or, at best, a lack of expansion which will result in minimal job creation and layoffs.  These results would be devastating to our economy given the size of small business and its importance to growth in this country.

In October, President Obama called for a Small Business Rescue Plan.  The plan focuses on using tools available through the Small Business Administration to extend credit to struggling firms while simultaneously providing tax breaks to help create more jobs.  President Obama’s plan is quoted saying, “With small businesses responsible for more than two-thirds of new job creation, this plan is vital to stemming job losses and turning our economy around.” 

With President Obama in office for less than a month we will have to wait and see what will come of his proposed plan.  Fortunately, we know that Obama believes in small business just as much as we here at CCV do and understand that when small business is unhealthy our economy is unhealthy.  To learn more details about President Obama’s proposed plan click here.