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What is considered a small business?
A small business is a privately held corporation or a sole proprietorship. It has fewer employees and earns less yearly revenue than a large business, but the exact definition varies from industry to industry. For example, the agriculture industry classifies small businesses as those with less than $750,000 in annual receipts on average, while the construction industry’s maximum is $36.5 million in average receipts annually.

It’s important to define exactly what small businesses are in order to protect and promote them. The government usually grants special subsidies and benefits to help the little firms compete against the big market-share holders in their industry. They can also generally get bank loans sooner and more easily.

Why are small businesses important to the U.S. economy?
Small businesses are important to the U.S. economy because they make a significant contribution to the yearly GDP while also creating job opportunities, especially for disadvantaged minority communities. They also spark innovation and bring original ideas and products to the market.

Small businesses also complement the economic activity of larger organizations. Many offer important B2B services like accounting, web design, and legal services. Others offer niche products and services; for example, it’s usually small businesses that build specific car parts for large auto manufacturers. An average car has anywhere between 28,000–30,000 parts if you count each nut, bolt, and screw. Most of these parts are produced by small companies who then sell them to larger firms.

What percentage of the economy is small business?
Small businesses account for 44% of economic activity in the U.S.A. according to the latest available report from 2014. While their overall market-share has decreased over the years, they’re still an important part of our financial system. Small businesses’ share of GDP has fallen from 48% to 43.5% over the years. According to the SBA Office of Advocacy, this decline can be attributed to the fast growth of large businesses and the Great Recession.
Approximately what percentage of the jobs in the United States do small businesses provide?
There are 30.2 million small businesses in the U.S.A., and they make up 47.5% of the private workforce. Small businesses created 1.9 million jobs in 2015, and they keep contributing to local communities by providing employment and financial stability to many.

Small companies tend to hire more often than big ones because they need employees to grow and expand. Unfortunately, small firms also have a lower survival rate, meaning workers sometimes lose their jobs because of business closures.

smallbizgenius.net

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