Based on their label, you might underestimate the importance of small business to the U.S. economy. But there’s a reason why small businesses are often referred to as the economic backbone of the United States.
As we approach one of the most important times of the year for businesses, it’s also a good time to revisit why it is so important to "shop small."
Per 2023 US SBA (Small Business Administration) (Small Business Administration) data, the almost 33.2 million small businesses in the U.S. (99.9% of all the business entities in the country), employ almost half of all of our country’s employees (46.4%) and have accounted for almost 63% of net jobs created since 1995.
In terms of the economy overall, small businesses contribute almost 44% of GDP (Gross Domestic Product).
SMALL BUSINESS OWNERS NOT OPTIMISTIC AS INFLATION, LABOR STRUGGLES CONTINUE: NFIB SURVEY
Small businesses are unique and important in that they help to decentralize economic power.
Small businesses provide an incredible opportunity for individuals to pursue economic freedom. Small businesses create new and innovative products and services, increase choice for consumers, increase employment choice for employees and contractors, and add value to the local and national economies.
The presence of small business serves as much-needed competition to larger businesses in a variety of industries, helping to balance out economic power and domination.
Small businesses have faced a number of challenges over the past several years. They bore the brunt of many COVID closure mandates and did not receive nearly enough compensation through the flawed PPP program and other efforts to compensate for the damage inflicted upon them.
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They endured, as a result of other COVID mandates, labor issues, supply chain shortages and then, in the past couple of years, extra fallout from the inflation that has broadly plagued the U.S. economy.
Small business networking platform Alignable, which publishes important small business research, shared in their Q4 Revenue Report that of the businesses surveyed "the majority of small business owners (52%) expect that they'll make less revenue by the end of Q4 2023, than they earned during Q4 2022."
The report respondents included among issues they face, "…consumer spending, cumulative inflation, labor costs, and a variety of issues related to still-high interest rates: shrinking margins, increased difficulty in paying back loans or securing new ones, and their inability to afford expansion plans."
But, don’t just shop small out of pity; small businesses provide a number of benefits that can’t be matched by larger competitors. From specialized products to customized service, you can build a relationship with a small business and get to know its owners and other key personnel that make that specific business thrive. It creates a special bond when you can develop that kind of relationship with a company and its staff.
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The 2023 American Express Shop Small Impact Study shared that 88% of small businesses surveyed responded that they "need the support of customers in their community given the current economic environment."
If you are looking for a place to start your shopping, I have curated a small business gift guide from my own small business community that you can access you can access here. Don’t forget to check out the small proprietors in your local community as well, as it is estimated that just more than two-thirds of each dollar spent with a small business stays in the community.
Where you choose to spend your hard-earned dollars can make a powerful statement. When you exercise your choice, whether it be Small Business Saturday or any given day, keep in mind how powerful and important it is to support American entrepreneurs.
