Small businesses are vital for the health and prosperity of local economies. They create jobs, foster innovation, circulate money within the community, and contribute to the local government. Here are some of the ways that small businesses benefit local economies:
- Job creation: Small businesses accounted for 62% of new jobs created between 1995 and 2020, according to the U.S. Small Business Association (SBA). They also provide opportunities for career development and entrepreneurship for many people.
- Innovation: Small businesses have to stand out among the crowd, especially among the big brands, and have to be highly innovative. They often introduce new products, services, or processes that meet the needs and preferences of their customers.
- Local circulation: Small businesses tend to keep money circulating within the local economy by outsourcing their functions to other local professionals and buying local goods . This creates a multiplier effect that boosts the income and spending of the community.
- Government contribution: Small businesses pay taxes to the local government, which can be used to improve public services and infrastructure. They also participate in civic activities and support local causes that enhance the quality of life in the community.
Small businesses are not only good for the local economy, but also for the national economy. They account for 44% of U.S. economic activity, according to a 2019 SBA report. They also drive the American dream by allowing people to pursue their passions and ideas. In times of economic uncertainty, small businesses are more resilient and adaptable than large corporations. They can respond quickly to changing customer demands and market conditions.
Small businesses are primed to grow in the future as they leverage new technologies, platforms, and opportunities. They can reach more customers through online channels, such as social media, e-commerce, and digital marketing. They can also access more resources and support through networks, programs, and organizations that cater to small businesses. With more innovation, collaboration, and diversity, small businesses can continue to play a crucial role in local economies and beyond.
