How Small Businesses Drive The American Economy

Posted on January 13th, 2023

Just as enough tiny droplets of water slowly fill a bucket, the growth of small businesses fills the U.S. economy. Big corporations might get a lot of attention when it comes to creating jobs, but small businesses employ more people and are more resilient when times get tough. Before coming up with something innovative that propelled them into growth, all big businesses once started out small. Not only are small businesses driving the U.S. economy, but they also keep the American dream alive.

According to the U.S. Small Business Association (SBA), small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses and 99.7% of firms with paid employees. Of the new jobs created between 1995 and 2020, small businesses accounted for 62%—12.7 million compared to 7.9 million by large enterprises. A 2019 SBA report found that small businesses accounted for 44% of U.S. economic activity. Without small businesses, the American economy and workforce would be a pretty wild landscape to imagine. Not only do small businesses provide more jobs, they also bring careers and opportunities. Successful small businesses put money back into their local community through paychecks and taxes, which can support the creation of new small businesses and improve local public services. No matter how small it starts—one, two, five, 10 employees—within that town, the city or the county, your small business creates new economies where once there was nothing. Small businesses are also better able to focus more energy on their customers and their needs, which can make them more adaptable to change in times of economic uncertainty. A global health crisis may have rocked the economy, but the formation of new U.S. businesses intending to hire employees rose to historic peaks in 2021, with nearly 1.4 million applications by September and over 400,000 more than at the same point in 2019. When tough times for big businesses lead to layoffs, small businesses become an opportunity.