Why Small Business is Crucial to The American Economy

People wondering why small businessis is crucial to the American economy may often hear about the importance of start-ups, new companies, and entrepreneurship, but simply may not quite understand the fundamentally critical nature of these enterprises. In an era where “big box” corporations such as Best Buy and Wal-Mart often take over smaller storefronts by being able to offer the same products and services at lower prices at a more efficient pace, it can be difficult to properly discern the rightful place of more modest organizations.

From their management to their marketing, their widgets to their workers, figuring out why small business is crucial to the American economy may be as simple as acknowledging the happy medium between faceless global conglomerates and independent contractors working solely from their home offices.

Innovation Source

While big companies are constantly coming up with creative solutions to the problems they encounter or new demand that the market places on them, they will still typically continue serving the same mission they set out to fulfill when they originally founded. An automobilemanufacturing firm will still be making autos, even if they slowly succumb to the pressure to implement clean-energy technology into their use. It is much rarer for such significant entities to undergo complete changes in industry, vision, or product line altogether. This is the key niche where more nimble ideas can serve an integral purpose and why small businesses are crucial to American’s economy: It only takes one person to have a great idea and the dedication to work hard to see it be made reality, even if nobody has ever quite done it before or done it profitably. With the right capital and co-workers surrounding him or her, that go-getter has now launched an innovation into the free market that could revolutionize the relevant scene or at least provide another launchpad for small-business-sized commerce.

Entrepreneurial Opportunism

The question at hand is why small business is crucial to the American economy, and it is a significant distinction to emphasize the “American” in that query. Small businesses may be important in other economies as well, but in a Communist country, a lower-income region, or other less ideal settings, it can be both more difficult and less incentive-laden for a small businessto thrive, or even get off the ground to begin with. It is part of America’s identity and culture to place great pride in the power of the individual, and the right of every human to be able to carve their own destiny in this world. How else better to exemplify that characteristic but by successful ventures into small business? The ability for a small business to succeed is essential in order for America to retain its rich cultural heritage.

Brute Force

One way to look at the issue of why small business is crucial to the American economy is to examine the sheer numbers. Among the many statistical resources online is the website for the Small Business Administration, which is the federally funded arm of the American government charged with the task of assisting small businesses into becoming self-sufficient entities in order to bolster their place in the economy. According to SBA.gov, small businesses represent over 99 percent of all employers, employ just over half of all workers in the private sector, pay over 40 percent of total U.S. private payroll, and produce over a dozen times more patents per employee than large patentingfirms. These figures are staggering, and speak to the true undeniable nature of the importance of American small businesses. It may be the big corporations that American citizens more often hear about, thanks to their pervasive visibility borne of massive promotional budgets, but it is all the small businesses working behind the scenes that genuinely bear the backbone of the American economy.

The public sector may employ a great number of Americans, but calls for a reduced government may place even more importance on the continued success of small businesses. However, even if government only grows larger and more influential on city, state, and national levels, this will still represent a hefty source of funding and other assistance that will trickle down to small businesses. Unless the United States of America undergoes a drastic, unprecedented, outrageous upheaval to its free-market economical values, small businesses will continue to be of crucial importance to the American economy.