Small businesses are essential to city and economic growth. They are unmistakably the backbone of our communities. In fact, some of the best ventures, such as McDonald’s and Google, began as small businesses. According to the Small Business Administration, the United States had approximately 19 million businesses in 1988. Of those, 15.7 million were operated as sole proprietorship – the businesses that traditionally train the work force by employing young people in their first jobs and women returning to the work force in local or part-time jobs.
Small businesses are normally privately owned corporations, partnerships, or sole proprietorship. The legal definition of “small” varies by country and by industry. In the United States, the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7 million in annual receipts for most non-manufacturing businesses.
Earlier in the decade, these businesses drove the U.S. economy by providing jobs for over half of the nation’s private workforce. However, when the recession hit, those same small businesses accounted for 60% of job losses. More specifically, firms with fewer than 20 employees began losing jobs as early as the second quarter of 2007. From 2008 to the second quarter of 2009, the smallest firms accounted for 24 percent of the net job losses. Businesses with 20-499 employees accounted for 36 percent of job losses and the remaining 40 percent of job losses were in large firms with more than 500 employees.
So with these startling numbers, how will small businesses continue to maintain in this society? Well, consistent revisions of their business strategy and the exploration of new territory have proven to be successful for many owners.
While America has long been considered the land of opportunity, there is clearly some growth opportunity in foreign markets. One of the ongoing trends that many small businesses have adopted is the exploration of clientele overseas.
President Karen Eng, of Cybernet System Management Incorporated (CMSI), was able to foresee the challenge of staying relevant during the recession; and made a decision to broaden her clientele with international exposure. The Schaumburg, Illinois-based engineering consulting firm is working to establish relationships with clients in China. Eng traveled to China three times last year to make sales calls and push advice from her consulting company, which serves Fortune 500 food and beverage, pharmaceutical and personal-care companies. She worked with the U.S. Commerce Department’s commercial service to find translators and drivers in China and asked her domestic contacts to open doors for her across the Pacific.
Another trend that many small business owners have adopted is social media usage. Alexa.com, the traffic ranking web information company, highlights the top ten most used websites. 50% of them are social media sites with Face book landing in the number two spot (Google is number one). Others on the list include YouTube at number three and Twitter at number 10. These sites have served as an outlet to finding a target market and reaching them effectively. To support this, many of America’s prominent small businesses have began scouting out young talent that come equipped with knowledge and excitement towards social media and the latest trends. This has proven to be great way to get the “buzz” out about businesses in a cost-efficient way. Additionally, it allows a company to tap into new markets without having a representative physically present.
Small businesses have and can remain relevant in this economy. However, business owners must work hard to stay abreast of current trends by networking, conducting thorough research before making decisions, and hiring employees that offer fresh perspectives. For more information regarding financial ideas, planning, and local resources please visit the Small Business Association website. Good luck with your business ventures!