Why Are Small Businesses so Important to Our Economy Essay Example
Why are small businesses so important to the American economy? What are the growth trends for small businesses? What are the reasons behind these trends? Will they continue? Give examples of how small business affects the economy of the area where you work or live. Small businesses are considered to be the backbone of our economy mainly because they innovate and create jobs at a faster rate than their larger counterparts. According to smallbusinessnotes.com, small businesses represent about 99.7 percent of all employer firms and have generated 60 to 80 percent of net new jobs annually over the last decade creating more than 50 percent of nonfarm private gross domestic product (GDP). (smallbusinessnotes.com). The main growth trends for small businesses today can be classified as Economic, Demographic, and Technology Trends. (Smallbusinesslabs.com). The Economic trends include, the recession driving small business innovation with people focusing more on cash flow, cost containment, customer retention and survival. With the continued job losses within the larger corporations, people are becoming more motivated to start up small and personal businesses and even better with the government’s intervention. The demographic trends include the uncertainty of baby boomers future benefits like social security and retirement incentives. This has led to their increased interest in starting their own businesses for future security. With limited hope for traditional employment in the future, many Generation “Ys” will be forced to either start or work for small businesses. The Technology trends include, Mobile computing which makes it easier to run a small business, cloud-computing which lowers capital costs and turns fixed costs into variable costs, and the abundance of Online marketing tools like Amazon, and EBay which make it a lot cheaper than the other traditional alternatives. Small businesses in the area I live have had both positive and negative effects