Small Business vs. Large Business: Who Is Better at Job Creation?
“Big business” is a phrase that comes up a lot in discussions of the economy, and can come across as intimidating, especially when compared to “small business.” And while “big business” is crucial to the economy, you might be surprised at how job creation plays out when compared to small businesses.
Size can be a disadvantage when it comes to innovation—coming up with and commercializing new ideas can be tough for a large company. Small businesses are nimble. The owner can make quick decisions rather than having to maneuver through layers of bureaucracy to proceed with an idea. Small businesses lead in new technology and patent creation in the United States. Small companies are also closer to their customers. A small-business owner may interact with customers on a daily basis, staying constantly abreast of customer needs and expectations.
Small Businesses By The Numbers
Small business owners are pioneers, known for their entrepreneurial spirit and independence. Collectively, they are a powerhouse, and they form the backbone of American business. A few statistics will make their economic strength and influence clear. You may be surprised to find out that, according to the Small Business Administration (SBA):
- There are 28.8 million small businesses (with 500 or fewer employees) in the U.S.
- Small businesses account for 99.7% of all American business
- Small businesses employ 56.8 million people, 40.8% of the private workforce
Small business is consistently responsible for more net job creation than big business. SBA research shows that small businesses have created 66% of the net new jobs in the country from the 1970s onwards. The Bureau of Labor Statistics reports that small businesses created 3 million new jobs in 2015. From this data, we can extrapolate that big business account for, on average, less than 40% of new job jobs.
Some of TMC Financing’s clients have had remarkable successes that translated directly into new job creation:
- La Bonita, a Hispanic supermarket in Las Vegas, NV, started with 300 employees when they applied for an SBA 504 loan in 2012. Since then, it has added over 245 employees to their staff.
- Flexcare Medical Staffing, a Roseville, CA-based healthcare staffing firm, has added 789 jobs in the two years since it received an SBA 504 loan from TMC.
- Windsor Fashions, a women’s apparel retailer in Santa Fe Springs, CA, added 414 new jobs between 2014 and 2016 after getting a loan from TMC.
Protecting The Future Of Small Business Job Creation
Sadly, despite American enthusiasm for small businesses, only about 50% of startups survive to see their fifth birthday. Are you in the best position you can be to continue small business owners’ reputation as the primary job creators in the national economy?
Obtaining financing is often a problem for small business owners: 27% of businesses surveyed by the National Small Business Association (NSBA) claimed that they weren’t able to receive the funding they needed. The most frequent primary impact that a lack of funding had was preventing business owners from growing their business (especially for women- and minority-owned businesses). The inability to obtain financing often leaves businesses unable to finance sales and forces employee layoffs.
There are places to turn to. Working Solutions, a Bay Area microlender, for example, provides microloans up to $50,000, as well as support in the form of training, mentoring and networking. All of these thing can be invaluable in maintaining the stability of a new business and increasing its chances of success. The SBA also offers support for small business. It sponsors the SCORE mentorship program and hosts online training courses on its website as well as in person workshops at most district offices. It also partners with educational institutions in Small Business Development Centers—a network resource provider with over 900 service sites!
Once your business is up and running, there are sources of support available to help you continue to expand, such as the SBA 504 loan. The 504 loan is designed with stimuli particularly to encourage employee growth. You can receive up to $5.5 million in loans from the SBA through your Certified Development Company (CDC) and in some cases you may be eligible for unlimited funding. With a 504 loan, you can buy land or a building, make improvements to your facilities or buy equipment with a long service life. Besides encouraging job creation, all of these things contribute significantly to the stability of a business and provide major new assets for the business owner.
When you consider how many small businesses surround you in everyday life, you can’t help but be impressed by the amount of time, commitment and labor these hard-working individuals devote to making their businesses come to life and stay alive.
TMC Financing is one of the nation’s top-ranking CDCs and a Premier Certified Lender with SBA. Our experts can help you find the assistance you need at any stage of your business, whether it is a microloan or a 504 loan for real estate acquisition. Contact a 504 expert at TMC today for more information.
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