The importance of small businesses to local communities is emotionally rooted in buying and selling with friends and neighbors. The importance of small firms in rural areas and big cities also is seen in the economic benefits of shopping locally. In some towns and villages, a small business is the only type that can survive while serving a reduced population.

In a big city, small businesses often offer a more diverse inventory or specialize in providing unique or personalized customer experiences. Small businesses also present new employment opportunities and serve as the building blocks of the United States’ largest corporations.

The Engine That Keeps the Machine Running

According to a report issued by the Small Business Administration (SBA) in 2019, small businesses account for 44 percent of economic activity in the United States. Small businesses create two-thirds of new jobs and deliver 43.5 percent of the United States’ gross domestic product (GDP).

In addition to keeping the economy running, small businesses also lead the way in innovation. Small businesses produce 16 times more new patents per employee than large patenting firms do. Small tech startups with fewer than 5 employees account for a large number of these patents. 

Employ Local Workers

The most visible benefit of opening a small business is the employment opportunities it creates. Even taking on a few employees part-time can help them pay rent, cover basic expenses, and sustain themselves with a reliable income. 

The coronavirus saw many talented people lose income through furloughs, layoffs, and pay cuts. Experts expect to approach the 25% unemployment rate that we saw during the Great Depression.

The Money Earned Stays in the Community

When a large chain like Starbucks, Walmart, or Uber Eats opens in a community, a portion of the profits leave the city (likely the state) and contribute to corporate earnings. While local residents certainly earn salaries by working for these companies, most of the money doesn’t stay in the area. 

Consider Uber Eats, which typically takes a 30% fee on most restaurant orders. Part of that money goes toward paying the driver, but most of it goes to Uber’s shareholders. 

However, if a local business hires a few drivers and sets up its own delivery policy, it can provide the same service to customers while keeping 100% of the profits locally.

Opportunities for Women and Minorities

Small business is the portal through which many people enter the economic mainstream. Business ownership allows individuals, including women and minorities, to achieve financial success, as well as pride in their accomplishments.

While the majority of small businesses are still owned by white males, the past two decades have seen a substantial increase in the number of businesses owned by women and minorities.

Winning Against the Odds

Despite providing the economy with an overwhelming number of benefits, small businesses don’t receive the same government support as large corporations. Small businesses do not receive the same tax breaks that are provided for large corporations.

Small businesses also don’t receive the same local and state incentives for things like production facilities, or research and development. Large companies can receive federal bailout money in times of financial turmoil, an option that is not available to small businesses. Small businesses have the odds against them but continue to thrive.  

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.