Economy Benefiting Greatly from Small Businesses
It’s no surprise that our economy is in rough shape. But one of the things that has helped keep our economy from completely hitting rock bottom is the role small businesses play in it. Over the past few years, small businesses have contributed a lot to the U.S. economy in a very positive way.
According to Rural and Agribusiness Enterprise Development Specialist for the North Dakota State University Extension Service Glenn Muske, “Small businesses have been noted as being the source of most new jobs and the core of economic growth. As the U.S. slowly moves out of the recent recessionary period, small businesses again are being looked to as drivers of future growth.”
The Kaufman Foundation, located in Kansas City, Missouri, just released new information regarding the vital role that small businesses are playing in the economy. The report specified that younger firms (ones that are only 1 to 5 years old) generated almost two-thirds of the job growth in 2007. What’s more, even though only 50% of the new firms last for 5+ years, the ones that did make it through generated 80% of the job growth.
The importance of small businesses to the economy is becoming more and more prevalent. Now, three-fourths of U.S. adults believe that a sustained economic recovery will require strong entrepreneurial and small business activity. Over half of the companies named in the Forbes Fortune 500 list in 2009 were started during the recession and new businesses continue to open every day. And even though growth slowed in 2010, nearly 500,000 new businesses opened every month.
Characteristics of these business owners differ, though the highest rate of business startups has been among people ages 55 to 64 with the slowest being among people ages 20 to 34. It is still impossible to determine the effects of the recession on these numbers though early indications are showing that more young people are starting jobs while older individuals are the leading creators of business startups.
According to Muske, “Many potential business owners hesitate starting a business for one of two reasons: They are afraid of failure or want outside financing. Regarding the failure aspect, many of today’s businesses were started by people who failed in earlier business attempts. And these owners will say that they have continued to make mistakes as the business grew. Not wanting to fail often is an indicator of not trying new things. Yet today’s rapidly changing world demands that the owner continually change his or her business model.”
Source: The Jamestown Sun – Small businesses playing big role in economy