Impact of Small and Medium Businesses on US Economy

The number of small businesses in the United States has increased by 49% since 1982. Today, small and medium businesses are the backbone of the country. SMBs contribute a major part in country’s economy and job creation. Following are some facts that will ‘change your mindset’ towards small businesses.

• GDP:
  • Small businesses account for more than half of the non-farm private gross domestic product (GDP).⁽¹⁾

• Patents:
  • Compared to large firms, small businesses have 16 times more patents per employee.⁽¹⁾

• Sales:
  • Small businesses account for 50% of all sales in the US.⁽²⁾

• Overview:
  • In the US, 99.7% are small businesses, and the rest 0.3% are large firms.⁽¹⁾ There are about 28 million small businesses, whereas large firms are only 18,500.⁽¹⁾
  • Small businesses occupy 30 to 50% of all the commercial space, which is equivalent to over 20 to 34 billion square feet.⁽¹⁾
  • 65% of customers say that the small businesses exceed their expectations in customer service whereas only 13% large firms are able to do so.⁽⁶⁾

• Job creation:
  • Since 1970, small businesses contributed 55% of all jobs and 66% of all net new jobs.⁽¹⁾
  • Small businesses created 43% of high tech jobs (engineers, scientists, computer programmers and others).
  • Since 1990, as big businesses removed 4 million jobs, small businesses added 8 million new jobs.⁽¹⁾
  • Existing businesses in the US contributed 60% of the private-sector’s net new jobs while the rest 40% was contributed by the star-up firms.⁽¹⁾
  • Nearly 6 million small businesses with fewer than 20 employees account for 90% of all the US employers and created employment for 20 million people.⁽⁴⁾

• Exports:
  • Small and medium-sized businesses (SMBs) are the largest group of the US exporters and contribute to a major part of gross domestic product (GDP).⁽³⁾
  • Small and medium-sized businesses account for 98% of the US exporters, whereas large firms account only 2%.⁽⁵⁾
  • Small businesses account for 97% of all the US exporters.⁽³⁾

• Customer Service⁽⁶⁾People in the US are more happy with the customer service of small businesses than big businesses.
  • More than 90% of the respondents in a survey conducted by CreditDonkey said that, the service provided by small businesses exceeded their expectations, whereas only 64% said that big businesses exceeded their expectations in customer service.
  • According to the CreditDonkey survey, small businesses do a better job than big businesses:
    • 71% of respondents said that small businesses anticipates their needs, whereas 41.8% of respondents said that big businesses anticipates their needs.
    • 63.9% of respondents said that small businesses anticipates their problems, whereas 33.8% of respondents said that big businesses anticipates their problems.
    • 96.9% of respondents say that small businesses consistently say “Thank you”, whereas 80.8% of respondents say that big businesses consistently say “Thank You”.
    • 68% of respondents say that small businesses are following up whereas 30.5% of respondents said that big businesses are following up.

Source:
1. SBA
2. BCG
3. Trade and economy
4. Fair Tax
5. USTR
6. CreditDonkey report