I recently read a couple of news items regarding “Small Business” in our local paper and it gave me pause to think about those types of enterprise and what they mean to our overall economy.
One of the articles covered a proposal for our small town here in New Jersey that would be designed to provide residents a credit toward annual property tax bills. This program would involve issuing some sort of card to use exclusively in local (small) business establishments, and would provide “points” to the buyer for purchasing goods or services in our town. This, of course, would be a program designed to keep our dollars here in town rather than shifting that cash out of town to non-local “big” businesses. Whether or not our town and our local small business owners will accept this program has not yet been determined but I thought it to be an interesting twist toward keeping our citizen’s dollars at home. And although I do not know this for a fact, I suspect that the firm who is the creator of this program may very well be a “small business”.
Another recent news article covered an upcoming seminar regarding “Social Media Marketing” that is designed to help small businesses understand how social media marketing can work for them. I think that many small business owners do not consider that they have either the time or funds to spend on marketing their businesses but there are, indeed, low-cost tools available to assist them in gaining visibility, developing relationships and increasing sales. So I am very pleased to see events such as this seminar being held to provide insight into how to incorporate social media marketing into small business operations.
As mentioned above, coming across these two recent articles made me stop to consider just what Small Business means to our country and its economy. So I began to do a bit of research for myself designed to learn more about this very important segment of our economy and our business world.
I thought that a good starting point to learn more about the value of small business to our economy would be to understand what constitutes a small business. And of course I discovered that the U.S. Small Business Administration (SBA) uses a certain criteria to define a small business. According to the SBA, a small business is one that “independently owned and operated, exerts little influence in its industry, and, with few exceptions, has fewer than five hundred employees”.
So OK – great. We know that we are talking about relatively small enterprises as opposed to our much larger businesses. What sets these businesses apart and what importance do they play in our economy? Well for one thing they are a major force in the U.S. economy, totaling more than twenty seven million entities and they generate some 50 percent of our GDP (Gross Domestic Product). And from an historical viewpoint, consider that so many of the millions of entrepreneurs who started businesses have, in fact, shaped our business world as we know it today. Think for a moment the long-term effects that leaders like Henry Ford and Thomas Edison have had on our business world as we know it today. (And we do know that these gentlemen began as small businessmen). And what about some of our other “big” names such as Gates, Walton, Jobs, Dell, Case and others who started small businesses that grew into the huge enterprises that we recognize today. So in some cases small business may be considered an incubator for “big” business.
Beyond the contributions to our general economic conditions made by small business, we find that they also do things such as:
- Create jobs
- Contribute to Innovation
- Provide opportunities not readily available to many people including women and minorities to achieve financial success and independence
- Supply components and services to large organizations and assist with distribution of their products
Before I finish this short discussion of Small Business and their importance to our economy, let me touch on two additional points:
- Many small businesses have the ability to respond to and adapt quickly to changing economic climates. The fact that most small businesses are very customer–oriented means that their customers will tend to remain loyal to their “comfortable” local businesses. Therefore, as socio-economic conditions change, our small businesses may be able to adapt more easily to those changes than their “big box” competitors. Inventories can be changed readily and retooling to produce substitute product(s)/services can be accomplished much more rapidly and cheaply.
- As to other benefits of the small business, consider that as new national level stores come into a local trading area, some customer loyalties will shift and some of our smaller firms may have to go out of business. Jobs may be lost negating the increase in jobs created by the new big business. Tax revenues formerly paid by smaller businesses may be reduced. And consider that local small businesses typically generate other business opportunities in the local area such as goods and services provided by local architects, contractors, interior designers, local advertising agencies, accountants, business attorneys and insurance companies. The typical new large business will not utilize these small local businesses so economic loss to communities may be multiplied.
So just what is “Pop’s Perspective” on Small Business? Well, I’d like to think that each of us might give a little more thought to what Small Businesses are, what their importance is to our overall U.S. Economy and perhaps remember to patronize the local small business establishments in our communities.
Be well, enjoy the spring weather and look for another of Pop’s Perspective articles soon. And I leave you with this final thought (which has absolutely nothing to do with the subject of Small Business):