Small Business Equals Economic Development

Here are a couple of items from the Office of Advocacy–U.S. Small Business
Administration
that you may want to bookmark and save. The next time your town council wants to
spend a few million of your tax dollars to encourage a new big box store to
move into town, you may be able to use the information to convince them to
reconsider.

First is the current issue of The Small Business Advocate, which
describes itself as the voice of small business in government. In an article titled “Recent Research
Uncovers Multifaceted Relationship of Entrepreneurship and Local Economic
Growth”
(a government title if I ever heard one), the agency reports that a
report to be published this month finds that “a state’s ability to increase the
number of small firm establishments is the most important thing it can do to
influence economic growth.”
The reports
authors conclude “The most fruitful policy option available to state
governments is to establish and maintain a fertile environment for new
establishment formation.”
 

In it’s annual report, “The Small Business Economy” the
agency says “This self-reliant approach to economic development relies on
grooming new and existing entrepreneurs instead of chasing larger companies,
known as ‘economic hunting’”
 

Considering the expense and effort required to lure big
businesses into a community, the report suggests that the best use of economic
development resources would be to support existing and potential entrepreneurs.

In another document, U.S. Small Business Administration FAQs:  Frequently Asked Questions, the agency offers the current statistics on small businesses (those with 500 employees or less).  These firms:

  • Represent 99.7% of all employer firms.
  • Employ half of all private sector employees.
  • Pay more than 45% of total U.S. private payroll.
  • Have generated 60 to 80 percent of all new jobs in the last decade.
  • Create more than 50 percent of all non-farm private gross domestic product.

And here’s a scary fact, firms with fewer than 20 employees spend 45 percent more per employee than larger firms to comply with federal regulations.

You can view the rest of their statistics here.

 

 

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