Have you ever wondered how many small businesses there are in the United States? The U.S. Small Business Administration estimates that there are 30.2 million small businesses in the U.S. as of 2018 (U.S. Small Business Administration [USSBA], 2018). That is 99.9% of businesses in the U.S., but most people buy from big corporations because those corporations have a lot of money, and can afford to advertise all the time. This can cause some small businesses to struggle, and some people afraid to even start a small business. There needs to be more support for small businesses, such as more resources available to help small businesses everywhere. Additionally they help the economy with the creation of jobs, and exports.
The authors of “Small Business Growth” Zeuli and O’Shea, work for Initiative for a Competitive Inner City (ICIC). They have done various experiments on the effects of the programs they developed on small businesses in large urban areas. The five programs they developed are based around trying to help entrepreneurs, make a business plan based on economic development, make getting help from government agencies easier and creating programs to help them find good employees. The final two are programs that can help them when they have questions and fight for less strict regulations, and upgrading the cities infrastructure.(Zeuli & O’Shea (2017). These programs are very well constructed, and if these were implicated in more urban cities it could help small businesses have the ability to compete against the larger more established businesses.
These programs can help fix some of the problems that small businesses face. One of the problems a lot of small businesses have, and that is finding competent workers. Although more programs need to be based on training people to have the skills that small businesses are looking for. That will help small businesses, but also the people as well. An area that really needs to be changed is politicians need to fight for fewer restrictions, and support the establishment of programs to help small businesses. They have the most influence, so citizens need to elect officials that will support small business and not big business.
Johnson, Faught, and Long write about their programs they used to help small businesses in the rural lower Mississippi Delta. The programs the developed focus on informing businesses owners on resources available on debt management, classes for all owners and employees on leadership and training entrepreneurs on how to start a business. The last two programs focus on informing younger people, the one program is to help provide teachers information on entrepreneurship and how to teach it to students, and a summer program that will teach children about entrepreneurship.(Johnson, Faught, and Long (2017).
These programs need to be used in every school, so students can have the knowledge about how to start their own business earlier in their life. Which could lead to more small businesses in future years. These programs would also be helpful to business owners that may not have a college degree. It gives students more options than go to college or going work for someone else after high school. It gives them the opportunity of starting a small business, and the knowledge of how to make it successful. It will give owners the skills to make their business more sustainable, as well as give them a place to go with questions or problems they may have.
If all of these changes were used in cities all over the country it would help make small businesses even better. These programs could be used in rural and urban areas, because their programs would benefit the people of both areas. For example, the better infrastructure would help everyone, because with better roads and building it will draw more people to the area, and create more business. It would give people more resources, to help them with their business development. These programs would also make a better business environment for all business owners, making opening a small business more appealing for people considering starting their own small business.
A lot of individuals have the idea to start a small business, but they don’t have the skills or knowledge to start one. This is where the classes listed above would help. A city or state could offer classes to people that can’t afford, or don’t want to go to college to get a degree in business. These classes could be available at a small fee and would teach them skills: money management, customer service, teach them about loans, employee management, taxes, required paperwork, etc. This class would give them the basics of starting and maintaining a small business.
A resource that needs to be easily obtainable is financial aid. In 2016, 240,000 establishments were started, but only $5.7 million in loans were given out. (USSDA, 2018). If the $5.7 million dollars was divided by each of the businesses started, each business would only receive a small amount of money. It is difficult for entrepreneurs to get business loans, because they need credit, and if they are just starting out they don’t have any credit. If they have to use personal credit they will not be able to build business credit which makes business loans even harder to get in the future. When an entrepreneur can’t get a loan from a bank, their only option may be to go through an investor, and that means they may have to give a portion of their company or a portion of their profit to the investors. If a loan is unattainable, and the entrepreneur doesn’t want to go through an investor they may be forced to pay to start their business with their own money, which can be a burden for families. There needs to be more push for banks to be more willing to take chances on small businesses, and help finance the startup of the businesses. If financial aid was easier for entrepreneurs to receive then more small businesses develop which in return would make more jobs and help the economy.
A result of there being many small businesses in the U.S. is they create a lot of jobs. According to the U.S. Small Business Administration, there are 58.9 million people in the U.S. that work for small businesses(USSBA, 2018). With more people being employed it means a lower unemployment rate, in February 2018 it was at 4.1% (USSBA, 2018). The lower the unemployment rate means a better economy, because more people are making money to be able to buy things. In a study done by Neumark, Wall, and Zhang they concluded that the smaller the firm size the larger the employment growth rate.(Neumark, Wall, & Zhang (2011). This shows that small businesses create more jobs in the U.S. than larger companies. It may seem like larger businesses would create more jobs, but if the number of small businesses versus large businesses is compared there are a lot more small businesses. With the creation of jobs there are more people in the workforce, so productivity rises which means the companies can keep up with consumer demand.
Another way that small businesses help the economy is that they export the goods they are producing. Of all the businesses that exported goods in the U.S. 97.6% of those companies were small businesses (USSBA, 2018). This means that there are more U.S. goods being sold in other countries and that means that people in the U.S. are making more money. Though small businesses do not have to pay an export tax on their goods, they do have to pay an income tax. This income tax can be a burden for some small businesses especially young businesses. With a lower income tax for small businesses it would be easier for businesses to profit and grow.
The U.S. as a whole needs to show more support for small businesses because they have certain struggles that would be non-existent if programs would be put into place to help the entrepreneurs trying to run a successful business. These small businesses help the economy with the creation of jobs, and they export their goods to other countries. If every person could decide to buy local instead of from big corporations that would be helping not only an individual but also the whole United States.