What do small businesses offer to the U.S. economy? How hard is it to keep a small business going? If you have ever thought about supporting or starting a small business, these are some basic questions you might ask. At Hattast-ique we wanted to shed some light on how small businesses play a role in the economy and the obstacles that have to be overcome in order to keep a small business alive.
Small businesses play a large role in the U.S. economy. When you support or start one you are helping our economy which is a great thing. Small businesses account for 55% of new jobs. In 2016, there were 28.8 million small businesses and that accounted for 99.7% of U.S. businesses (Source: SBA Gov 2016). Taking a trek back in time to the recession that we most recently encountered we can see how small businesses had a large role in helping the U.S. recover from the recession. Between 2009 and 2013, 60% of jobs were created by small businesses (Source: Fundera).
The success of a small business is a tough road. 75% of small businesses use their own personal finances for the primary start up funding (Source: Bluevine 2015). Half of small businesses survive the first 5 years and one third survive 10 years (Source: Bureau of Labor and Statistics 2016). A key example can be seen in 2013, there were 860,000 new small businesses and 780,000 closures (Source: BLS 2016). There are some key reasons that this happens. Economic uncertainty or cash flow is a huge factor in why small businesses fail. Another reason is a decrease in consumer spending. Some small businesses face regulatory issues and this can lead to closing the doors. Another factor is man power, keeping and managing employees and the business can be one of the harder things to undertake as a lot of people have an idea on a business, but no management experience.
So you may be saying, man owning a small business is frightening, the simple answer is yes, but worth the risk. Some of the best things in life come from taking a chance. So if you are thinking of starting a business be informed, do your research on the area you want to dive into. If owning a small business is not for you, maybe think about shopping local.