Small businesses and the economy?

Small businesses are a huge driver of the economy. One could argue they are THE driver of the economy, in fact. According to the Small Business Administrations Office of Advocacy, Small Businesses account for 99.7% of all businesses in the US. It goes on to report businesses under 500 employees account for between 60-80% of the country's GDP. Moreover, Small businesses employ about half of the country's workforce. If these figures alone don't convey the profound importance of Small Businesses in the US economy, consider the overarching perception of the economy. Obviously in a country of nearly 300 million, a collective perspective is hard to pinpoint. But I would offer an underlying (majority) sentiment is uncertainty. This is important because it influences how individual buyers choose to spend, and ultimately how businesses spend. This effectively trickles up, and small businesses feel it first: ie. Mom and Pop shops close before giant corporations. Where small businesses may be forced to close the doors, enterprises merge; where small businesses often may rely on financing and loans, large businesses inherently have more deploy-able resources... or may be sustained through bailouts.

To illustrate another key difference, I'll highlight a few points from Focus' most recent survey: In general, enterprises were more optimistic about the general state of affairs than small businesses, both today and in the coming year. Also consider: small businesses cite their top priority investment opportunity in Sales: investing in the people, technology, and function necessarily to simply close more business. But, despite existing in the same economic climate, most enterprises point to new products/ markets more in an attempt to differentiate themselves rather than stay afloat altogether. Another way to think of this effect is that small businesses are slower to weather the storm (if they can weather it at all). Thus, considering smaller firms account for such a high percentage of American business, these effects manifest in figures such as the unemployment rate, for instance.

In a sentence, small businesses are critical to the economy for many reasons, perhaps the most important of which is abundance and thus influence.