There are 28 million small businesses in the U.S. They are the backbone and spirit of our economy. In fact, they are the very reason Sinu was formed back in 2000 because we wanted to give small businesses an edge by providing the enterprise-level technology and expertise which big business could afford, but were out of reach of most smaller organizations. Each year at this time, the U.S. Small Business Administration (SBA) celebrates National Small Business Week (this year it’s held April 30-May 6). We join the SBA in applauding entrepreneurs and have compiled a few statistics and observations about why small business matters and what makes them important – and distinct – from large corporations. (Note: While SBA defines a “small business” as having less than 500 employees, 98 percent of small businesses have less than 20 employees.)
It’s important to realize that in spite of the doom and gloom you may hear from the media about downsizing and lost jobs, the small business sector is growing rapidly. While corporate America has eliminated 4 million jobs since 1990, small businesses have added 8 million jobs in that same period.
So why is small business growing when big business is shrinking? U.S. consumers love their small businesses! Small businesses matter because 90 percent of Americans shop at a small business at least once a week and more than 40 percent of those shoppers visit small businesses at least three times per week. According to 2016 Cox Consumer Pulse on Small Businesses, 63 percent of people go out of their way and make a conscious choice to support local businesses.
What gives these businesses this edge? Americans trust small businesses. In fact, they are three times as likely to express confidence in small business as they are in big business, according to a recent Gallup poll. With 68 percent (up 1 percent from 2015) of U.S. adults report having "a great deal" or "quite a lot" of confidence in small business, it gives them a huge competitive advantage over big business which dipped to 18 percent (down 3 percent from 2015 to 2016).
Reports also show that strong customer service is an important factor that keeps customers coming back. And, for many, convenience is a major motivator. But maybe it’s just that we humans like to root for the underdog and want to support people who have the spirit to have a vision, take a risk and try to make a go of it.
In an Inc. article, The Psychological Price of Entrepreneurship, Toby Thomas, CEO of EnSite Solutions compares an entrepreneur to someone brave enough to ride a lion: "People look at him and think, this guy's really got it together! He's brave!... And the man riding the lion is thinking, how the hell did I get on a lion, and how do I keep from getting eaten?"
While small business owners are brave, they are also optimistic and the data is promising for continued growth:
- In 2015, businesses with less than $5 million in annual revenue experienced an average of 7.8 percent annual sales growth. That is up almost a full percent from 2014. (Source: Sageworks analysis).
- Net profit margins improved for small businesses to 7.5 percent in 2015, which is up from 6.4 percent in 2014. (Source: Sageworks analysis).
- At the beginning of 2016, a Wells Fargo survey of 600 small businesses found that two-thirds of small business owners said their financial situation is good and 71 percent said they expect their company to be in good financial shape that year.
- The CAN Capital Small Business Health Index indicates that this optimism remained strong throughout 2016, finding that in August 2016, 64 percent of business owners were expecting growth in the next 12 months.
And did we mention they are generous? 91percent of small business owners give back to their communities averaging about $6,600 per business for a total of $41 billion nationwide.
We know small business matters and we salute our customers and fellow entrepreneurs who have realized their vision, continue to “ride the lion” and help grow the economy. As your IT partner, our services and solutions are designed for small organizations to support your growth. Let us know how we are doing and how we can support you better.