Small Businesses fuel economic expansion

[Rakibul, Md Asikur Rahman Chy, Principal Economist at the Policy Research Institute and member secretary of Bangladesh Economists’ Forum, Fetema Tuz Johora, DBA Student Westcliff University, Md Wali Ullah, Bangladesh Awami Leage Politician, Md Abdul Barek Saju, MBA in MIS student at International American University, June 28 2024, Scientific Research an Academic Publisher American journal of Industrial and Business Management, Department of Business Administration Westcliff University, Department of Business Administration International American University, “Driving Growth: The Integral Role of Small Businesses in the U.S. Economic Landscape”, , Accessed July 16 2024, AMH]

5.2.2. Job Creation

Small businesses in the United States wield a significant impact on both the economy and society at large, as highlighted by recent surveys and research findings. With a resounding 86% of adults acknowledging their positive influence, it’s clear that these enterprises, typically characterized by having fewer than 500 employees and often just 1 to 4 staff members, hold a special place in the national consciousness (see Figure 3). Despite their modest size, small businesses

Table 1. Results of the interviewers.

Interviewer

Opinion

True Smoke Shop

266 S Rampart Blvd

Los Angeles, CA 90057

Owner: Garbour Harzour

I started this business in January 2024. I am expecting that I need to survive during the first two quarters or half of the year, as I was not busy. I do believe that my business will be busier than in the first six months. That is why I want to say that one can be successful if they are patient enough.

Crest Liquor Store

2543 W 3rd Street

Los Angeles, CA 90057

Owner: Garbour Harzour

This business was established in this location almost 40 years ago but I came to purchase this store in September 2021 during the second wave of COVID-19. Frankly speaking, it was a quite difficult period to survive as an owner of this small business. Still, I needed to accept the risk and around the first year, I had to survive. However, my perseverance and hard work as well as good customer service brought a bright smile that I could not expect. It is now going to be well to pay 5 employees salary and all utilities business after that I have savings a good amount at every individual month.

Figure 2. Overall scenario of small business in USA (Main, 2024).

Figure 3. Percentages of job creation (Delfino, 2024).

collectively employ a staggering 56.4 million workers, contributing over $16.2 trillion in revenue by the close of 2021. Their contribution to job creation is substantial, with an impressive 12.9 million new net jobs generated over a recent period, although smaller in scale compared to large corporations (Delfino, 2024). The proliferation of small businesses, which have doubled in number since 1982, is indicative of their growing importance in driving innovation, fostering employment opportunities, and fueling economic expansion. Notably, the profitability of these ventures has soared in recent years, with over 65% reporting profitability in 2022, up from 40% in 2018 (Ahammad et al., 2023; Akid, Wasiew et al., 2021; Delfino, 2024), underscoring their resilience and adaptability in dynamic market conditions. However, amidst their success, small business owners grapple with challenges such as inflation, with over half citing it as a top concern. Nevertheless, small businesses continue to distinguish themselves by offering personalized experiences and nimble operations that often outshine their larger counterparts, further solidifying their indispensable role in the fabric of the American economy.

5.2.3. Local Economy

Small and startup businesses play a vital role in the fabric of local economies across the United States, generating incomes and offering employment opportunities within communities (Seaman et al., 2017). Despite their positive impact, the proliferation of small businesses can sometimes exert downward pressure on local economies. Nevertheless, their significance cannot be understated. These enterprises often require minimal initial investment, enabling them to swiftly adapt and evolve their operations to meet changing demands and market conditions. Moreover, they serve as hotbeds of innovation, providing young entrepreneurs with the opportunity to experiment and test new approaches to various operational challenges. Consequently, small businesses collectively contribute substantially to the overall U.S. economy, fostering an environment conducive to their growth and sustainability. Statistical data from the Small Business Administration reveals regional disparities, with California boasting the highest number of small businesses followed by states like Texas, Florida, New York, and Georgia, while states such as North Dakota, Alaska, and Wyoming have fewer small businesses (Delfino, 2024). Additionally, the distribution of small businesses ownership across gender lines remains uneven, with a significant majority still owned by men, despite the increasing presence of women-owned enterprises (see Figure 4). This disparity underscores the ongoing need for efforts to promote equity and inclusivity within the small business landscape nationwide.

5.2.4. Industrial Development

Small businesses play a pivotal role in shaping various industries, particularly in manufacturing and mining, where they account for over 80% of companies. With size standards often capped at 500 employees, these enterprises are the backbone of employment within their sectors (Delfino, 2024; Mansour et al., 2024; Sobuz et al., 2023). For instance, in general building and heavy construction, the size standard of $33.5 million in average annual receipts reflects the predominance of smaller players. Their significance extends beyond mere numbers,

Figure 4. Small business ownership (Main, 2024).

as small businesses are hotbeds of innovation, constantly driving forward new ideas and technologies. Moreover, their contribution to infrastructure development and manufacturing growth is invaluable, aiding governmental efforts and fostering a robust economy. In essence, the sustained growth and viability of small businesses are essential for ensuring not just sectorial prosperity, but the overall health of the economy.