Definition of a Small Business
Small businesses are crucial to the United States’ economy, as they support job creation and international trade. According to the U.S. Chamber of Commerce (2023), a small business is defined as an independent entity that employs fewer than 500 people.
Small Business Statistics
Number of Small Business Employers and Employees
Data related to small companies indicates that they are the biggest employers in the country. Small businesses employ over 61 million individuals, each using an average of ten. Morris (2021) provides a pointer to better fortunes in those engaged in small businesses, as 44 of the owners plan to enhance starting salaries. According to Morris (2021), 46 percent of the owners intend to increase existing pay, and 36 percent have contemplated offering better bonus payments. Therefore, they are crucial in supporting employment and expanding opportunities for American citizens to earn a living.
Forecast for Small Business Growth
The number of small businesses is expected to grow in the country. According to the definition adopted by the U.S. Chamber of Commerce (2023), there are about 33.2 million small businesses in the U.S. Wheelwright (2022) states that there are approximately 32.5 million small businesses in the country. According to Wheelwright (2022), roughly 20 percent of all small businesses in the country are owned by women, while minorities own around 1.1 million small companies, or 19 percent.
Statistics of Small Business Shutdown
However, small businesses encounter numerous challenges in conducting their operations, which can cause some to close. The COVID-19 pandemic contributed to some difficulties, leading to the closure of several small businesses. According to Wheelwright (2022), during the COVID-19 period, one in five firms shut down. In particular, Wheelwright (2022) indicates that approximately 1.3 million small businesses had to close temporarily, of which only 423,879 reopened, while nearly 1 million closed permanently. Following the pandemic, the government has continued to support companies to ensure they remain stable and contribute to the economy.
State and Small Business
Role of Small Business in Export
Furthermore, small businesses play a crucial role in the U.S. export trade, comprising the majority of the country’s exporters. The U.S. Chamber of Commerce (2023) indicates that small businesses account for approximately 98 percent of all recognized exporters in the U.S., with the majority of goods being exported to the United Kingdom, Japan, Mexico, Canada, and China. The businesses account for about a third of the total export value, amounting to about $413 billion (U.S. Chamber of Commerce, 2023).
Impact of State Activities on Small Business
The U.S. government seeks to involve small businesses in federal and state procurement activities, as it is the largest consumer of commodities globally. The governments and their agencies have implemented measures to ensure that contract opportunities are listed publicly. The government goes the extra mile to ensure that some contracts are set aside exclusively for small businesses. In particular, the U.S. Chamber of Commerce (2023) indicates that about 23 percent of prime government contracts are awarded to eligible small businesses.
State Funding for Innovation Activities
The government also offers extra support through counseling and innovation support. Innovation support is provided through several agencies as part of continuing facilitation for research and development. Innovation is explicitly supported under the Small Business Innovation Research Program (SBIR), which has a specific mandate to ensure that businesses continue to innovate.
Other State Funding Programs
The federal government of the U.S. also provides financial support through the Small Business Administration (SBA) loan program. SBA loans are designed to support and assist small businesses nationwide by partnering with lenders, such as banks and credit unions, to provide loan guarantees and other forms of financial assistance. Wheelwright, T. (2022) states that between 2020 and 2021, the SBA program provided financing amounting to over $73 billion to support small businesses, and in the process, created or retained over 1.2 million jobs. The continued support for small businesses will ensure they provide essential support to facilitate the growth of the U.S. economy.
References
Morris, C. (2021). The small business economy is set to soar in 2022. Nasdaq. Web.
U.S. Chamber of Commerce. (2023). The state of small business in America. Uschamber. Web.
Wheelwright, T. (2022). The state of small business in 2022: Has the pandemic stopped entrepreneurs?. Business. Web.