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Common Misconceptions Of Small Businesses In The US

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Recommended: Importance of small and medium enterprise

Introduction:
It is perhaps a common misconception that the economy of any nation is mostly based on large enterprises and multinational corporations (MNCs). The opposite is actually true. Even the largest economy of the world (USA) is largely based on small business enterprises. Firms with less than 500 employees made up 99.7% of all businesses in the US. Firms with fewer than 20 employees made up a staggering 89.9% of all businesses in the USA.1
Small business are long thought of as the incubator of new ideas, offer products and services to MNC, employ the largest majority of the workforce, and collectively pay more in corporate taxes than large corporations.

What Are SMEs
Small and medium enterprises (SMEs) make up the bulk of any economy. …show more content…

Diversity: SMEs pretty much cover all sectors of the economy. A decline, or even a collapse, of one business or sector though will impact others, is much less than say the collapse of the aerospace industry for example. If Boeing or Airbus were to become defunct the shape of the industry would change forever. If a company that employs 50 workers closes its doors, the impact on the national economy as a whole is minimal.
8. Localization: A small business tends to operate primarily in its home base employing locals and contributing to local economic growth. A MNC, on the other hand, may move its operations overseas to cut cost causing local unemployment levels to rise, income tax revenues to decline, and shrinkage of the local economy.

Conclusion:
Small businesses are the backbone of any national economy. Firms that employ 500 or less workers make up most of the GDP, employment in any given economy. As those SMEs expand, their impact on national economic growth increases, employment levels go up and income tax revenues increase which stimulates government spending or the reduction of existing budget deficits. Innovation of SMEs not only creates more jobs and growth, but also creates entirely new industries that contribute to national economic growth.

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