The American Dream has long fueled the passions of many across this great nation. The idea of the bootstrapping business owner working late nights and weekends while holding down a day job, or going all in on his growing business, is inspiring to say the least. It might even pull out a little entrepreneur in us all.
And while the nearly 30 million-strong small businesses in America are considered the backbone of the economy, and a major driver of it, the last few years haven’t been great for the incoming business landscape.
Post-recession, small businesses are failing faster than they are launching. Yet, even so, more than half a million new small businesses launch annually across the nation. Small business owners are a tenacious breed who still find a way to push through. The continued growth of small businesses is evidenced by the $19.2 billion in SBA loans that funded small businesses in 2013.
According to the U.S. Chamber of Commerce, nearly half of the U.S. gross domestic product (GDP) is driven by small business. And really, it’s no surprise considering that the 2010 Census Bureau revealed that small businesses comprise 99.7% of employer firms and account for 49.2% of jobs in the private sector.
Creating the backbone of the economy
Former President Barack Obama proclaimed: “Our country started as an idea, and it took hard-working, dedicated, and visionary patriots to make it a reality. A successful business starts much the same way—ideas realized by entrepreneurs who dream of a better world and work until they see it through. From the family businesses that anchor Main Street to the high-tech startups that keep America on the cutting edge, small businesses are the backbone of our economy and the cornerstones of America’s promise.”
• They drive innovation
Small businesses are often built on innovative ideas that solve unmet needs. That innovation is further expounded as competition grows. To that point, the SBA found that small businesses produced 16 times more patents per employee compared to larger firms.
• They fuel commerce
Exporting products abroad creates new avenues for revenue. More than 90% of U.S. economic growth is driven by global trade. Businesses that are able to scale their products or services for the global scene enhance economic growth and increase competition abroad.
• They create jobs
The Kauffman Foundation found that for the last 30 years, small businesses have been responsible for the creation of all net new jobs, and they still employ half of working America.
• They are progressive
One in four small business owners wants to expand their companies, meaning that dependable small businesses could eventually become a large profitable enterprise with the potential to further boost the economy.
Despite the fact that small businesses fuel the economy, it’s become increasingly difficult to launch and thrive under a still struggling financial landscape and a plethora of government regulations, compliance requirements and tax codes that make launching and maintaining a small business quite the endeavor. Time will tell how the new tax reforms and the still-recovering economy will affect small businesses. But if future small business owners are anything like those of the past, they’ll find their way to grow—no matter the obstacles.