According to the U.S. Small Business Administration, small businesses represent more than 99 percent of all U.S. employers and have created 65 percent of new jobs in the past 17 years. It’s obvious how incredible their impact is on America’s economy. And it’s only getting bigger. Confidence in U.S. small businesses has climbed to its highest level in three years. The National Federation of Independent Business’s optimism index rose to 94.5%, the highest index since the recession began in December 2007. From employment to sales to the potential end of price cutting, small businesses are taking a stab at improving the outlook of America’s economy, and future is looking bright.
Before we review the encouraging numbers small businesses are currently posting, let’s check out some small business statistics and trends that highlight the true impact that small businesses have on our economy. The estimated 29.6 million small businesses in the United States:
● Employ just over half of the country’s private sector workforce
● Hire 40 percent of high tech workers, such as scientists, engineers and computer workers
● Include 52 percent home-based businesses and two percent franchises
● Represent 97.3 percent of all the exporters of goods
● Represent 99.7 percent of all employer firms
● Generate a majority of the innovations that come from United States companies
The benefits of small businesses in our economy are limitless. They can provide job opportunities, increase government revenue due to businesses taxes, and most importantly, they can stimulate our economy and possibly economies around the world. Small businesses are the engine that drives the American economy, and the number of small businesses tends to increase during rough financial and economic times. As you can see, this is definitely true in our current situation. The good news is that the hike in the small business optimism index will bring our economy great benefits and paybacks.
Employment rates in the small business sector are slowly increasing, with plans to add to payrolls rising 2 points to a net 5%. In a February survey, a net 15% of firms said they were having difficulties filling job openings. The sales outlook is looking good too. The net percent of small business owners projecting higher sales, adjusted for inflation, rose 1 point to 14 percent, the highest level since September 2007. Plans for capital investment are holding steady, and the percentage of those expecting credit conditions to ease is also staying the same. As far as price cutting goes, February’s report signaled the “end of a long period of price cutting,” which signals a potential future increase in price averages as supply adjustments restore pricing power.
While we are far from being where we were before the recession, it is encouraging to see that small businesses are stimulating our economy and helping us slowly dig our way out of the economic slump. It is also important to note that there are myriad factors that affect our economy, but the promising numbers on small businesses speak for themselves. Let’s hope this is a sneak peek at what lies in our economic future.
Authored by Financial Social Media (financialsocialmedia.com)