If you believe giant corporations such as GE or General Motors play the biggest role in the American economy, you’re not alone. The importance of small businesses on the economy cannot be overstated, however — especially since small businesses are the biggest retail employers in America, according to the National Retail Federation.
What defines a small business? Not income or profit — in fact, any company that employs up to 49 people is considered a small business.
Why We Need Small Businesses
Did you know that 99.7 percent of all employers are classified as small businesses? Or that more than half of America’s gross domestic product is created by small businesses? If innovation interests you, then you’ll appreciate knowing that small patenting businesses develop an astonishing 13 to 14 times more patents per employee than larger companies. Whether you’re a home-based, sole proprietor technology business or you operate a family shop that’s been in business since the Great Depression, small businesses run the economy.
America is an entrepreneur’s dream. Not only are half of all small business start-ups still in operation after four years, but new small businesses with employees launch every year at the rate of 500,000 every 12 months. About 75 percent of new jobs every year are small business jobs — jobs that create and support families, schools and communities.
Small Business Economic Benefits
Small businesses provide economic opportunity for all members of the community. Special government-backed lending programs serve women- and minority-owned businesses with unprecedented opportunities. Businesses in the retail sector are particularly free to grow, according to The Economist, because “Successful retailers can grow and grow and grow into national or global chains. That may make the high street a little less quaint, but it makes for higher productivity, more rapid growth, and more job creation. And less corruption.”
Although the romance of the small business forming the foundation of the community is a real dream that happens every day, small businesses also spread “good ideas across the entire economy, creating lots of jobs through expansion,” The Economist notes. That means the impact of small business on the economy must include the spread of innovation.
Know Your Niche
What’s the difference between a small business that’s still in operation after four years and one that isn’t? Knowing your customer, and providing customers with profitable products or services they actually want. Business owners who gather valuable knowledge through personal observation, conduct detailed research, and take the time to speak with industry colleagues about the challenges in the sector are more likely to build a model that’s more business and less hobby.
If you’re considering starting a new business, ask yourself: am I fulfilling an untapped need in the market? Who are my competitors? How is my product or service better and different from theirs? Can my business add value to the community? How will I find and hire qualified employees? Do I need a brick-and-mortar location, or should I go entirely online?
Unearthing the answers to these questions — and finding solutions for problem areas with Native Merchant Services, LLC — will keep your small business humming long after you launch.