How important is your small business to the economy?
The “shop local” movement extols the virtues of small businesses and the unique customer experience they offer. But small businesses are not just essential for providing local color.
Although we hear a lot of media buzz about the Amazons and Walmarts and Apples of the world, the truth is, small businesses are the backbone of the American economy.
Womply is committed to helping small businesses thrive in a digital world. So it stands to reason we are interested in the data showing the value of local, non-enterprise-level businesses in driving innovation, revenue, and job creation.
We looked at the most recent data from the U.S. Small Business Administration’s Office of Advocacy and found some fascinating numbers.
What percentage of firms are small businesses?
For starters, try this statistic on for size: 99.9% of firms (businesses) are small businesses, according to the SBA’s definition. Let that sink in for a minute. Of every 1000 businesses in America, 999 are small businesses. So… you’re kind of a big deal.
The role of small business in job creation and employment
What percentage of new jobs do small businesses create? From 2000 to 2017, small businesses created 8.4 million new jobs while large businesses created 4.4 million. Small businesses accounted for an amazing 65.9% of net new job creation during that period.
Small businesses also comprise 47.5% of private sector employees (59 million out of 124 million employees). You might be curious how small businesses can generate roughly two-thirds of net jobs, but only hold approximately half of total employment (still an amazing figure!). Good question: as small businesses grow, their statistics are applied to small business job gains. But once they pass the threshold between being classified as a small business and a large business, their job increases are counted as large business employment.
Small business is vital to technology innovation
While large businesses may have more revenue and headcount to devote to innovative new technologies or product research, the fact is that small businesses are the real innovators and risk-takers, particularly in the high tech industry. As of the most recent data available from 2015, there were 250,865 small employer firms in high-tech industries, representing a whopping 98.1% of all employer firms in these industries. The majority of these small businesses provide services in either computer systems design or architecture and engineering, with 17% in other high-tech fields.
How about national exports?
Small businesses comprise 97.6% of exporting firms (287,835 small exporters), generating one-third of known export value ($440 billion out of $1.3 trillion). So, small businesses aren’t just valuable to local consumers.
Starting a small business is risky. What can you do to improve your odds?
Now that we’ve covered the vital contributions smaller businesses make to the American economy, here are some harsh realities well-known to any local business owner: while roughly two thirds of all jobs created and half of all employment is generated by smaller businesses, starting your own business is still scary—and risky.
Although four out of five businesses started in 2016 survived until 2017, statistics show that only about half of new businesses last 5 years, and only about one-third last 10 years or more. The SBA points out that “Although data is not available on firm survival rates, other data sources suggest that about two out of three establishment exits are the result of firm closures.”
So what can you do?
Womply has built small business software specifically designed to help local businesses thrive in a digital world, including business intelligence, CRM, reputation management, marketing automation, and payment processing.
Womply helps you improve your online presence, attract more customers, engage existing customers for repeat visits and customer loyalty, automatically build and update your customer database, and segment customers to send timely, targeted marketing campaigns — even if you don’t have customers’ email addresses.
Bottom line? Womply businesses earn 20% more revenue, 22% more repeat customer visits, and save 10 hours per week. And if you’re earning more revenue, getting more repeat customers, and saving more time, there’s a much greater chance that your small business will still be providing vital, unique services and products 10 or 20 years from now.
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Save 10 hours per week, on average
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