Everyone agrees on a broad level that small businesses are vital to the US economy. However, most people would be surprised to know how important. The United States Small Business Administration keeps records and statistics on small businesses in the United States and some of their findings are surprising.
First, the typical perception of a small company that mom and pop operation with few, if any, employees is not the whole picture. The Small Business Administration defines a small business as an independent company with fewer than 500 employees. There are an estimated 23 million businesses in the United States that meet this classification. In some smaller towns in the United States, these companies represent a major source of employment.
In fact, the small business as defined by the Small Business Administration represent 99.7 percent of all employers in the country and employ half of all private sector employees. More than 45% of private sector payroll is generated by small business. In the last decade small businesses have had 60 to 80% of all new jobs created annually.
Although a large proportion of small businesses in trade and services, small businesses are rapidly making gains in the technology sector. 41% of high tech workers like engineers, scientists and computer programmers are employed by small businesses. Employees of small businesses produce 13-14 times more patents than those employed by larger companies.
The Small Business Administration also offers some interesting comments on small business survival. Two-thirds of small businesses survive at least two years, declining to 44% in four years. Most of the factors that contribute to small business Surviving are well known, such as access to capital and education owner. However, a lesser-known aspect of small business survive the company is large enough to have employees.
Similarly, obstacles starting a small business are lack of access to start-up capital and lack of education. However, the number one barrier to small business start-up and the main concern of the current small business owners is access to private health insurance. Individual health insurance for sole proprietors is much more expensive than getting coverage through an employer. If a small business owner is able to offer health insurance to employees, are in control and television often cost much higher than for larger companies.