When you flip on the news or scroll the internet, you are met with articles and information about large companies that dominate the headlines. We see layoffs, new contracts won, acquisitions, and new innovations. It still stands true that these big companies are driving market shares in our country, but the impact of small businesses drives a considerable portion of our economy as well.
A 2019 report by the U.S. Small Business Administration (SBA) found that small businesses generate 44% of all economic activity and created two-thirds of all jobs in the U.S. that same year. In a post-pandemic world, small businesses are the backbone of our society and have gained in popularity, job growth, and overall potential. Small businesses themselves benefit the local economy more than a large business in more ways than one. Unlike a large corporation, small businesses don’t have internal systems in place for accounting, legal, supply, and maintenance. They normally outsource these functions of their operations to local or regional professionals – people who normally spend money in that same community.
The amount of job growth a small business can bring to a community is huge. According to the SBA, small businesses created a net 12.9 million new jobs in the last 25 years, which accounts for roughly 66% of all jobs created in that span. To put it in perspective, large businesses only dated 6.7 million jobs. During the first two quarters of the pandemic in 2020, the SBA reports over 9.1 million jobs were lost. During the four following quarters, an estimated 5.5 million jobs were created through small businesses. That’s a 60% recovery from the pandemic-era decline.
When a community has a wide variety of small businesses, it creates an opportunity for others in the community as well. Whereas large businesses rely on a systemic hiring process that can take a longer period of time, small businesses have a better chance at hiring based on not only experience but on personal merit as well. This is huge in a society where people are looking for work and may have a gap in their employment history due to the pandemic.
Small businesses may be “small” in perspective to the big-box chains we are all familiar with, but the impact they have on the communities they serve is tenfold. Acknowledging their importance and understanding just how much they help their communities just may change where you shop.