Before you go on assuming that the small bakery shop in your little town has little contribution to the US economy and overall well-being of your town, know that the only thing ‘small’ about a business is its size, not its impact.
Why are small businesses are important to the US economy? Well, they can help meet the ever-growing and ever-changing demand of people, and drive-up the overall satisfaction of consumers, something that is essential for a thriving economy.
Do Small Businesses really matter?
Yes. They do. Here’s a list of reasons to believe that small businesses are just or even more important than bigger businesses:
Benefits to the Local Community
The revenue generated helps communities recover financially as the money will stay within the local community rather than going into the pockets of someone outside the community.
They also help build and sustain communities through their charities as they are committed to the local causes and welfare. Hence, they have an overall positive effect on their communities.
They simply give back much more to the local communities, as opposed to the profit-driven big businesses.
According to a source, in 2019 around 30.7 million small businesses in the USA played a major role in job creation as they employed around 47.3% of the workforce.
Growing employment opportunities raise living standards through wages and profits made. Once regional employment increases and productivity increases, the benefits are passed onto the national level.
Smaller businesses are also often hired by a bigger business and can often complement them. Big businesses often ‘outsource’ for goods that they themselves may not produce. Hence, their economic value is indispensable.
Tax Revenue: Lowering the Economic Burden on Government
Like any other business, small businesses are taxed. These taxes help the development of infrastructure in local communities. Taxes help improve healthcare, schooling, and security as the local government gets funding.
An Opportunity for Women and Minorities
Small businesses are an opportunity for women and minorities to enter the workforce and contribute to the economy of the country.
Many small businesses owned by women are driven to help other women gain employment, and empower them financially.
Similarly, when people of different ethnicities open businesses, they are more willing to hire other minorities.
Hence, small businesses also serve the social cause of equality and acceptance.
The Bearers of Economic Burden during COVID-19?
Crushed due to the pandemic, almost 3,000 small businesses had to shut down in the last few months in just New York City. This situation has led to further unemployment and economic turmoil.
These businesses may have been small, but their prosperity was and still remains important to those from the neighborhood who benefited from their services. Moreover, the US economy also depends on their taxes and the employment they generate.
This is both, a result and a reason for the economic collapse of the USA post-COVID-19.
Post-COVID Economy: Why Small Businesses are important for US Economic Recovery?
Entrepreneurs are the backbone of any economy, and the pandemic has caused them critical damage. Active ventures in towns and cities can cause tremendous economic recovery post corona. Why is that so?
Buying local from small businesses could be a way to reduce dependence on imports and help make America self-sufficient while the economy gets back on its feet. Doing so can also drive upmarket competition improving product quality which can, in turn, help the USA increase its export shares.
As demand for these locally produced services and goods increases, there will be a ripple effect in the form of increased employment.
Giving subsidies to small businesses can be a mutually beneficial relationship between the government and small business owners as tax revenue and employment generation will reduce government expenditure on unemployment benefits.
The Takeaway: Buy Local in a Global Age
With the current uncertainties and financial losses being faced, small businesses could be the ray of hope Americans have been looking for. They can help bring the country out of the current economic mess.
Buying local is not just a solution, it is a necessity. Small businesses offer high quality and personalized customer services, create unique products, have a lower environmental impact as opposed to the bigger brands, and operate much more efficiently as they are driven to satisfy each customer.
They are, at the end of the day, a uniting force for the local communities within America.
Role of Small Businesses in US Economy – FAQs
• Increase consumerism
• Increase exports share and balance of payments improves