Small businesses are major drivers in the U.S. economy, spurring local job creation and innovation while also fostering entrepreneurship among women, minorities, veterans, and other portions of the population.
Nationally, small businesses account for 48 percent of all American jobs and contribute 43.5 percent of U.S. Gross Domestic Product (GDP). Even though these businesses are considered the “backbone of the economy,” small businesses have faced an economic and existential crisis during the COVID-19 pandemic.
Despite offering an enormous amount of advantages to the economy, small firms do not receive the same level of government backing as major firms. Small businesses are not eligible for the same tax incentives as bigger enterprises.
Small enterprises are often not eligible for the same municipal and state subsidies for things like manufacturing facilities and development research. In times of financial distress, large corporations can get federal bailout funds, but small enterprises do not have this choice.
Despite the odds being stacked against them, small businesses continue to prosper. They contribute to local economies by providing jobs, purchasing local goods, paying sales and property taxes, and utilizing local suppliers and support services.
Reflecting America’s Diversity
More and more, small business ownership is reflecting the diversity of the United States. As of 2012, 14.6 percent of small business owners were minorities, compared with 11.5 percent in 2007.
This includes 2.3 million Hispanic-American-owned businesses, 1.9 million African-American-owned businesses, and 1.6 million Asian-owned businesses.
This diversity is also reflected in the 36 percent women business owners, and the 9 percent of small businesses owned by veterans.
Although we’re a long way from small business owners representing the American population, this is evidence of the value and potential of the small business economy for minority groups.
Emerging new products and business
If we look at the historical data, we see how the SME had limited products and services to provide to the customers especially in tier II and III cities. But at a fast-growing pace, the sector is quickly adopting industry and business models.
They are no more limited to just one service or products but coming up with multiple ones. This sector, if provided with the right support, has the potential to spread industrial growth throughout the country.
Although the SME sector faces a lot of challenges yet their diversion towards everyday growth is appreciable. As per a government report, at present around 36 million SMEs are generating 80 million employment opportunities, contributing 8 percent of the GDP, 45 percent of total manufacturing output, and 40 percent of the total exports from the country.
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