The Small Business Owner: America’s Local Hero

Running a small business is no small feat. It requires dedication, grit, and well beyond 40 hours a week of your time. While it may be exhausting, being a small business owner is rewarding. Wisconsin Senator Ron Johnson recently drew both criticism and praise for his refusal to support the Senate tax reform bill for its potential impact on small business. Johnson started and ran a small manufacturing company before he became a senator, and he stands with others who believe small business owners really are the backbone of the United States economy.

How Many American Businesses Are Small?

A small business is usually defined as one with fewer than 500 employees and less than $7.5 million in annual income. The U.S. Small Business Administration (SBA) releases an annual small business profile. Here are the latest statistics for all states.

• There are 29.6 million small businesses that employ 57.9 million citizens.
• About 97 percent of United States trade with exporters comes from small businesses. A large percentage of the nation’s $1.4 trillion in exports is generated by small businesses.
• Several key economic indicators signal a strengthening economy, with growth at an annual rate of 1.2 percent. Unemployment continues to decline.
• In 2014, small businesses created around 1.4 million jobs. Firms with between 20 and 49 employees showed the greatest gains.
• Small businesses employ 47.8 percent of the private workforce.

The Small Business Administration breaks statistics down by state. In Wisconsin, 97.7 percent of businesses are small businesses, and 50.7 percent of those with jobs are employed by one, even higher than the national average. Annual growth rate was 3.1 percent, which is also higher than the national average. In international trade, 86.9 percent of companies exporting Wisconsin goods were small firms.

Small Businesses Create Jobs

Unemployment is down, but policymakers are still searching for ways to provide jobs and keep citizens making money. The Small Business Committee says small businesses create seven out of ten new jobs. One in four small business owners are interested in expansion, which requires adding additional staff. Most start-ups begin as small businesses, creating positions that didn’t exist until their creation.

Wisconsin’s 440,000 small businesses provide jobs for more than 1.2 million people, and experts project that number will continue to grow. A Womply study found 31 percent of Badger State business owners plan to hire additional staff members, which could create an additional 136,000 jobs.

Optimistic Wisconsin merchants plan to add jobs because they feel both the state and national economy show growth that they expect to continue. However, some small business owners have concerns. They fear rising health insurance costs, have tax concerns and feel there’s a possibility of an economic recession.

Small Businesses Lead in Innovation

It’s a common misconception only large corporations have the facilities and the resources to lead the way in innovation. The very nature of small businesses often necessitates thinking outside the box. Unique culture and individual creativity often allows them to innovate better than organizations with much more manpower.

Small businesses can make quick decisions that lead to faster idea development and design execution. Instead of spending years on large-scale product development and testing, waiting for separate products to develop parts or evaluate prototypes, small businesses speed through processes with a small number of decision makers.

Small businesses also have more financial agility. When they come up with a new product or idea, they can quickly shift funds to produce and market what they’ve created. They often create a collaborative environment that doesn’t exist at large corporations and helps nurture individual strengths. Small businesses generally emphasize innovative thinking as part of job descriptions, which may be why the Small Business Administration found they produced 16 times more patents per employee than large firms.

One SBA success story involves Wisconsin’s Henry Schwartz and brothers Andrew and Anthony Gierczak. The three began brewing beer in college and started selling their product via crowdsourcing. In 2013, they opened a Madison brewery, which they outgrew two years later. They currently run a brewing facility and taproom in Milwaukee, growing through constant distribution innovation and careful strategic planning.

Small business ownership reflects the diversity and creativity so important to Wisconsin and the rest of the United States. The most successful become big businesses, creating an even greater impact. Diversified Management Services is committed to helping businesses of all sizes grow. Let us handle your bookkeeping, accounting and payroll so you can focus on running your business. Schedule a free consultation today.