Economic Recovery May Be Resting on the Shoulders of Small Business

Uncle Sam Needs You and Your Business or Consulting Practice

As you celebrate your July 4 holiday, reflect on the newest information from The Small Business Advocate published by the US government’s Small Business Administration. Reading this may make you feel downright patriotic for being a small business person, consultant, coach, or entrepreneur.

Here’s part of what economist Brian Headd has to say discussing the more than 23 million people who are in business as a solo venture, as well as small business owners with employees:

“Small Businesses Most Likely to Lead Economic Recovery … While recent job losses are widespread, small businesses’ historical overall rate of net job creation makes them a key player in solving our labor market woes. And the number of newly self-employed, whether by choice or not, still offer glimmers of hope …”

“When the economy struggles, the number of non-employers (this is US government-talk for businesses with only one person and no other employees) tends to increase at higher rates, while the number of employer businesses stagnates or declines. For example, when the economy was humming along during the late 1990s, non-employers had annual increases in the 2 to 3 percent range; as the economy limped along from 2007 to 2008, they increased an estimated 8.1 percent or 1.7 million. The change in the number of employers is not nearly as sharp. Employers have tended to have annual increases of 0.75 percent to 1.5 percent when the economy has done well and negative to flat when the economy struggles.”

As Headd explains, non-employer small businesses are critical to our country’s economic recovery but are not simply in business because they have no other options in a down economy:

“Non-employer growth is not simply a response to economic factors; many personal factors cause people to go into business for themselves too.” Self-employment rates, the SBA says, increase with: (1) age, (2) income, (3) and generally education, with the economy playing less of a factor than you might expect.

So enjoy Independence Day; watch a parade, set off some fireworks, and then Monday morning, go right back to doing what you are doing in your small business, consulting practice, or entrepreneurial venture, because clearly, America needs you!