Small businesses are the backbone of the American economy, employing nearly half of the nation’s private-sector workforce and creating two-thirds of net new jobs annually. However, when economic times get tough, small businesses often feel the pinch first.
Supporting local small businesses through challenging periods can help preserve jobs and promote economic growth in your community. Here’s why small businesses matter for the economy as a whole.
Supporting Innovation and Competition
Small businesses play a crucial role in driving innovation, developing new products and services, and keeping competition healthy in the free market. Unlike large corporations who can leverage their size and resources to dominate industries, small businesses must continually create value for customers through ingenuity and high-quality offerings.
The startup trying out a bold new business model or the niche store catering to a specific audience brings new ideas into the economy. These fresh concepts and product varieties give consumers more choices and better prices.
With their flexibility and willingness to take risks, small businesses account for the majority of groundbreaking innovations over the last few decades.
From technological advances to new management practices, small business owners have pioneered developments that larger companies have adapted on a broader scale. Supporting small businesses means funding the next generation of innovative products, services, and ways of doing business that benefit all consumers.
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Creating Quality Employment Opportunities
Small businesses generate the majority of net new jobs in the economy. Unlike large corporations who often ship jobs overseas to reduce labor expenses, small businesses hire locally within the communities where owners and employees live.
These local jobs shorten commute times, bring wages back into the community, and give residents a stake in their hometowns. Local hiring also builds loyalty among employees who feel invested in the success of the small businesses that gave them opportunities.
In addition to creating jobs, small businesses provide quality employment opportunities in an engaging work environment. Instead of just being another cog in a corporate machine, small business employees often have more autonomy and responsibility.
They can gain a breadth of experience and knowledge working alongside business owners. Small teams breed collaboration and idea-sharing. For those seeking meaningful work or wanting to advance quickly, small businesses provide rewarding career paths.
Driving Community Growth and Development
Small businesses are deeply embedded within their local communities. These community-rooted firms rely on neighborhoods, towns, and cities to supply their customer base.
Compared to large national chains or global corporations, small business owners have a vested interest in the prosperity of their communities. These local stakeholders promote civic engagement, volunteerism, and philanthropy in their regions.
Studies show that spending at small businesses versus national chains or online retailers can have more than twice the multiplier effect per dollar on local economic development.
Beyond monetary investments, small businesses give communities a sense of place and identity through unique, often longstanding establishments. The beloved local bakery, bookstore, or restaurant becomes a gathering place for residents while attracting visitors interested in an area’s distinct culture.
Tourists and new residents flock to communities with vibrant small business districts and opportunities to “shop local.” This boosts regional growth, development, and real estate values over the long-term.
Supporting seasoned local enterprises as well as budding community-minded entrepreneurs ensures the continuation of the small businesses that make towns across America thrive.
Spurring Equity and Inclusion
Starting and owning a small business is also an empowering means to advance equity and inclusion at the community level. Systemic obstacles have made it difficult for women entrepreneurs and business owners of color to access capital and contracting opportunities.
However, collective efforts to improve education, networking, and investment pathways are lowering barriers to small business ownership. Diverse-owned startups bring fresh perspectives into markets, reach underserved consumer bases, and provide employment opportunities in underinvested areas.
Patronizing minority-owned and women-owned enterprises boosts demand for these businesses, helping them flourish and expand. This enables a new generation of entrepreneurs to gain skills and seed funding for launching their own ventures one day.
Supporting small businesses lifts up community members who have untapped talents but less access to traditional routes to advancement. Thriving small businesses have a domino effect, becoming local engines that drive prosperity across their regions.
The Value for Consumers and Society
Consumers reap significant benefits from vibrant communities of small businesses across retail, services, dining, tourism, the arts, and more. Unique establishments fill distinct niches and provide more product choices than standardized chains.
Business owners focus on customer service and relationship-building to stand apart from competitors and online sellers. Society gains from the local job creation, civic involvement, innovation incubators, and economic diversification that small businesses drive.
Yet if small businesses lack adequate consumer support and access to responsible financing, communities suffer the consequences. When longstanding institutions shut down during recessions or periods of transition, neighborhoods lose beloved fixtures that connect residents to their towns’ histories and distinctive local flavors.
The jobs, tourism draw, and economic growth potential vanish as well, often replaced by the homogeneity of national brands. However, by patronizing local small businesses, funding community development programs, and modernizing policies to help these enterprises thrive, communities can tap into the engine of economic prosperity that small businesses represent.
Conscious consumer, investor, and policymaking choices that remove barriers and boost resources for local entrepreneurs not only uphold these vital pillars of community vibrancy, but also drive the economy forward.
The diverse opportunities that small businesses bring for innovation, job creation, and customized products and services are unparalleled economic assets, worthy of measured protection through challenging times.
Supporting small businesses means investing in the workers, dreamers, creators, doers and local heroes who together ensure America’s economy remains dynamic, equitable and ready for the future ahead.