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According to the Small Business Administration, there are 28 million small businesses in the United States. This figure, at first glance, proves that small business in the United States is actually quite large. Indeed, as I have proudly pointed out in this space over the last 20 years, the small business sector is responsible for creating half of the US economy and employs more than half of all employees in the sector private. Nothing diminutive about it.
Just as it is interesting to segment large companies into categories, it is also useful to put this figure of $ 28 million in perspective. The main calculation divides small businesses into two, 80/20: 22 million individual operators without employees and about 6 million entities with between 1 and 500 employees. 500 is the dividing line between big and small businesses.
Talking about employees, it is more than remarkable to recognize that almost 90% of small employers have less than 20. And not to take anything away from larger small businesses, but that the largest cohort of small employers represents the gear major of the economic machine of Main Street. . And it is the literal display of capitalism: a family business run by local interests, which provides income for many residents of the community, while undoubtedly being a staunch supporter of non-profit entities that complement asperities of each community. Oh, and these owners know the names of all the children of their employees.
Other small business parameters include the two major baskets: retail and wholesale, respectively business-to-consumer (B2C) and business-to-business (B2B). And of course, there is the segmentation that includes our agrarian heroes who help feed the world, American farmers and ranchers.
There is a segmentation criterion that affects all sectors: the way a small business owner is considering growth. On the main street, growth is a metaphor for where we are going. Most millions of non-salaried homeowners have what is called a "lifestyle," and they are generally satisfied if next year looks like this year. Yet many of the 22 million independent entrepreneurs – as I was before – want to take it to the next level, with employees. And of course, the six million companies employing employees almost always have some sort of perspective and growth plan.
How growth is funded at the small employer level is another way to segment Main Street businesses. Only a tiny percentage of these employers are looking for investor financing or are eager to make themselves known. Others have discovered that professional fulfillment and financial independence can be achieved. In fact, more than any other sector, this sector personifies the American dream because it represents the fundamental critical mass of the local economy and society: a small company located in the ground on Main Street and generating a weekly payroll .
In 2009, I predicted that companies that survived the difficult period ahead would emerge with stronger balance sheets and cash positions. In an online survey, we recently asked small business owners how they would finance their growth in the future. Two-thirds said they would use their own capital rather than their debts (read: balance sheets and stronger cash positions). It should be noted that this level of self-financing growth has been unprecedented for half a century. By deleveraging and becoming better managers, they became masters of their own growth destiny.
With the help of the new tax law, the least oppressive regulatory conditions in decades, a pricing power never seen in years and a growing national economy, our survey revealed that most small businesses It's time.
There is nothing small – or insignificant – in the US small business segments.
Jim Blasingame is the author of The 3rd Ingredient, the journey of analog ethics in the world of digital fear and greed.
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