How Small Businesses Impact Our Economy

Photo by Roberto Cortese via Unsplash

Although they are often overlooked, small businesses are the engine of our economy. They fuel our job market and generate the most innovation. In fact, according to a study done by the US Small Business Administration, small businesses account for approximately 44 percent of US economic activity. 

One of the main ways that these businesses contribute to the economy is by adding to the job market. Small companies have shown to produce tons of jobs for people who can’t be employed into larger businesses. The Small Business Administration finds that small businesses produce 1.5 million jobs annually, accounting for 64% of new jobs created in the US. As these businesses rapidly grow, an increasing number of small businesses start appearing, easily outnumbering the amount of jobs that larger organizations produce. The jobs that small businesses generate are crucial for our economy as they stimulate economic growth, but they are also very important to local economies on a smaller scale. 

In addition to creating jobs, small businesses also drive innovation. These businesses are constantly engaging in research and development while getting things done efficiently. One of the biggest advantages that small enterprises have when it comes to innovation is speed. Because of their smaller size, there are less procedures involved before the idea is fully implemented. For example, smaller companies wouldn’t have to go through groups of shareholders or executives for approval, and they wouldn’t have to discuss the business plan beforehand. This allows small businesses to get their products out quickly with the same amount of quality that a larger business would produce. Because of this quicker process, small businesses also increase competition which is important so that consumers get the best prices and quality of goods while also increasing innovation. 

Small businesses are a crucial part of our economy, creating jobs for people who larger businesses cannot employ and driving innovation. But our economy isn’t the only one that benefits from small businesses. The entire global economy also sees immense benefits from small companies as they export goods and raise the GDP (gross domestic product). By playing a crucial role in local, national, and global economies, small businesses play a fundamental role in our country.