Everyone agrees on a general level, that small businesses are vital to the American economy. However, many people would be surprised to know how important it is. U.S. Small Business Administration to keep records and statistics of small businesses in the United States and some of their results are surprising.
First, the perception of a typical small business as a mom and pop operation with just a few, if any, employees is not the whole picture. The Small Business Administration defines a small business as an independent company with fewer than 500 employees. There is a 23 million U.S. businesses to meet this classification. In some small towns in the United States, these companies represent an important source of employment.
In fact, the definition of small business administration small businesses, which represent 99.7 percent of all employers in the country, and employ half of all private sector employees . Over 45% of private sector wages and salaries generated for small businesses. In the last decade small businesses have accounted for 60-80% of all new jobs each year.
Although most small businesses are small retail businesses and service are rapidly making gains in technology. 41% of workers such as engineers, scientists and programmers who work in small high-tech. Human small firms produce 13-14 times more patents than those employed by large companies.
Small Business Administration also offers some interesting remarks on the survival of small businesses. Two-thirds of small businesses survive for at least two years, falling to 44% after four years. Most of the factors that promote a small business surviving are well known, such as access to capital and the level of education of the owner. But a lesser known factor in the survival of small businesses is that the company is big enough to have employees.
Similarly, the barriers to starting a small business include the lack of access to seed capital and lack of education. However, the number one barrier to small business start-ups and the main concern of the current owners of small businesses have access to private health insurance. Individual health insurance for private entrepreneurs is much more expensive than the coverage by the employer. If a small business owner is able to provide health insurance to their employees, administrative and premium costs are often much higher than for large companies .