Not So Small After All
Current statistics suggest that small businesses are major players in the U.S. economy. Over 50% of the current working population in the United States works in a small business setting, as cited by Forbes.
These individuals work for the 28 million small businesses that are currently in operation, 22 million of which are nonemployer businesses (source). Employer-based businesses make up more than 75% of all businesses currently operating in the U.S.
Also, more than half of the aforementioned businesses are operated out of people’s homes. These statistics suggest that small businesses, start-ups and home-based businesses account for a significant portion of the business that takes place in the U.S.
Pattern of Growth
It appears that the growth of small businesses will continue to progress in 2014 as small businesses have generated more than 65% of the new jobs created in the U.S. since 1996.
This growth is occurring at an impressive rate as more than 540,000 new businesses are being started each month. This trend favors small business growth as more employee businesses shut down than start up each month. On the other hand, nonemployer businesses have seen steady growth in recent years as 2011 saw the number of nonemployer businesses grow by 2%.
In order to facilitate growth, it is expected that small businesses will exhibit certain trends in the way they operate in 2014. One trend that can’t be ignored by businesses both big and small is the growth of mobile commerce. People are purchasing items via mobile devices at a rate that continues to trend upward.
This past holiday season exemplified this trend as the top 20 retailers reported an increase of more than 55% in the number of online sales conducted via mobile devices.
Sales statistics revealed that 69 percent of tablet users and 45 percent of smartphone users made mobile purchases this past holiday season. These statistics suggest that mobile commerce is too large of an opportunity for small businesses to ignore in 2014.
Social media has become a critical tool for businesses as the average U.S. consumer spends 15 hours per week on social media, as cited by AT&T.
Small business owners will be drawn to these social channels as they seek to access their target markets in the digital space. Expect social media to continue to develop into an integral marketing strategy for small businesses.
Working from Home
Thanks to the growth of the internet and web technology, working from home is becoming increasingly common in the United States. This means that many small business owners are hosting their operations from the comfort of their own homes rather than taking on the additional costs associated with physical business locations.
Currently more than 16 million people work from home in the United States, a figure that is expected to continue growing in 2014. Social collaboration tools and communication apps present an opportunity to conduct business from home, generating predictions that suggest the number of people working from home in the U.S. will increase by 64% in the next four years.
The trend toward working from home and the popularity of nonemployee business means that online outsourcing is becoming more common.
It is anticipated that 1.3 billion people will work virtually by the year 2015. This means that there will be a large pool of available home-based laborers for businesses that look to avoid health care costs and large salaries. Contract and pay-as you go arrangements are viable options for small businesses.
The ever-increasing number of start-ups that are created each month will need funding in 2014. This demand outweighs the capabilities of credit institutions to support new business. It is for this reason that crowdfunding services are becoming increasingly popular with small business owners. These services make it possible for small businesses to access potential contributors for their business endeavors.
In 2013 more than $2.7 billion was raised through crowdfunding campaigns in the U.S. This is a statistic that is expected to rise in 2014 as crowdfunding services become more specialized and small businesses begin to recognize their potential.
The weight that small businesses carry in the U.S. economy has continued to grow in recent years. These previous trends and improving technologies suggest that small businesses will continue to adapt and grow in 2014.
Micro Business Power
While researching these statistics I stumbled across a comment that wanted to focus on the connotation of ‘small business’ because 400 employees was considered ‘small’ in their field. This led me to an article focusing on micro-businesses which entails 1-4 employees.
From 2004 to 2010, U.S. micro-businesses (1 to 4 employees) created a net of 5.5 million jobs; large businesses (those with greater than 500 employees) lost 1.8 million jobs during the same period (source).
This information comes from the California Association for Micro Enterprise Opportunity (microbiz.org), with a clear focus on empowering micro-businesses and spreading awareness about how strong they are. This reminded me of the ant analogy. Ants are super strong for their size. If ants were as large as humans we’d be doomed!
According to the Association for Enterprise Opportunity, micro businesses generate $2.4 trillion in receipts and account for 17% of GDP and employ more than 31 million people. The key takeaway from this article is that with high quality education, micro-businesses could grow and flourish much faster than medium and large businesses. This idea is simply a hypothetical scalability scenario – if 100,000 micro businesses can add 1 job every month for a year as a result of proper education/direction, the result is 12 million new job opportunities in just one year. Of course this is all hypothetical, but the potential is much greater and realistic for micro-businesses because of how quick they can move compared to larger businesses.
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