Last Updated 10 May 2020

Importance of small businesses to us economy

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US economy is not dominated by large corporations as the popular notion is but by small businesses. (Small Business, nd). Small business make an important contribution to the US economy as these bring innovation, are more flexible in responding to consumer demand and more receptive to opportunities for women and minorities as well as for activities in areas of distress. (Leebaert, 2006). Small businesses create a growth cycle generated by self employed entrepreneurs which contribute to economic growth by challenging, existing technologies as well as management practices.

The enterprising approach leads to a gradual expansion of economy through the agility displayed by the young entrepreneurs. Such businesses overcome the needs of large quantum of cash and buying power of big corporations, thereby facilitating multi point growth. The contribution of small business to US economy can be gauged by the fact that it makes up for 99. 7 percent of US employers who have less than 500 employees, generates over 50 percent of the non farm output of the economy and employs almost 50 percent of the non governmental jobs in the USA annually.

Small businesses also form 97 percent of exporters and produce 29 percent of the export value of US goods, which is a considerable contribution to the overall US economy as 25 percent of its growth is based on exports. The total jobs created by the small businesses amount to 12 million. (Leebaert, 2006). The significance of small businesses to US economy is also highlighted by the fact that these are the beginnings of large businesses as is shown by the example of Apple Computers which began as a three man enterprise.

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The importance is also indicated by the fact that these provide niche products which large enterprises cannot or are not inclined to provide. (Leebaert, 2006). Thus the overall importance of small businesses lies in their large contribution to employment, exports, enterprise and growth to the US economy.

References 1. Leebaert, 2006. How Small Businesses Contribute to U. S. Economic Expansion. eJournal USA: Economic Perspectives, January 2006. http://usinfo. state. gov/journals/ites/0106/ijee/leebaert. htm. (8 July 2006). 2. Small Business. Nd. http://usinfo. state. gov/products/pubs/oecon/chap4. htm. (8 July 2006).

Importance of small businesses to us economy essay

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