It can be easy to overlook the power of small businesses. Technology, globalization, and the vast resources of large corporations can make it seem like small businesses are doomed for extinction. But that couldn’t be further from the truth. Small businesses continue to make a crucial impact on local economies, employ diverse workers, and even force the evolution of their large industry counterparts. Here are five ways that small businesses wield incredible power in the globalized economy.
A Source of Job Creation and Innovation
Small businesses continue to be an important job creator and source of innovation in the U.S. economy. According to the Small Business Administration (SBA), small businesses with fewer than 500 employees accounted for 44.8% of U.S. private-sector employment in 2019.
Innovation is also a hallmark of small businesses. In a 2019 survey by the research firm Edelman Intelligence, CEOs of brands with fewer than 500 employees reported higher levels of innovation when compared to their larger counterparts.
The survey found that the usually-smaller staffs of smaller businesses allowed them to “focus on pressing needs, maintain agility, capitalize on opportunities quickly, and differentiate in the market” — key drivers of innovation.
Leveling the Playing Field
Small businesses are often disadvantaged when it comes to resources and access to large markets. But technology is helping to level the playing field.
Thanks to services like Amazon, Shopify, and Square, small businesses are reaching more customers than ever before. It’s easier than ever for smaller businesses to reach and serve customers both locally and internationally.
New technologies like artificial intelligence (AI) and block chain are also giving small businesses access to powerful tools and insights. AI-enabled chatbots, for instance, allow small companies to automate customer service without having to hire extra staff.
Driving Inclusive Change
It’s no secret that small businesses have long been viewed as a powerful tool for creating jobs and nurturing shared prosperity in communities of all sizes.
This is especially true in the areas of minority entrepreneurs, who have historically had difficulty accessing resources and capital. In 2019, minority-owned businesses accounted for 4.5 million small business establishments in the US — and a whopping 59% of all small business growth since 2007.
The importance of minority entrepreneurs goes beyond the obvious economic gain; these businesses provide jobs, cultivate economic resilience and address community needs in an increasingly diverse global environment.
Forging New Paths
Small businesses also have the ability to blaze trails in their industry and beyond.
Take Amazon, for example. The company was born out of the small business idea of selling books online. The company’s success transformed it into an influential global company.
More recently, startups like Airbnb, Uber and Lyft have revolutionized their respective industries, capitalizing on current technology to build viable businesses, create jobs and disrupt the way people move and stay.
Bigger isn’t always better. Small businesses possess the agility, creativity and innovative abilities to break with the status quo and forge new paths.
Greater Accountability
Finally, the power of small businesses lies in the accountability they provide. Smaller businesses tend to be more accountable to their customers, to their employees and to their communities.
A 2019 poll by Allstate and Entrepreneur magazine found that 1 in 5 entrepreneurs prioritize customer retention and 8 in 10 prioritize employee satisfaction when it comes to business goals.
Small business owners’ willingness to go the extra mile and provide better customer service and support can help them maintain loyalty and attract new customers.
In the end, it’s clear that small businesses wield a powerful force in the modern economy. Despite the numerous challenges they face—from access to capital, technology, and resources—these companies remain a significant job creator and source of innovation. What’s more, these companies provide an important level of customer service and accountability that large corporations can’t quite match. Small businesses have a major impact on communities as they bring jobs and prosperity to previously disadvantaged or underdeveloped areas or promote minority-owned businesses. And last but not least, small businesses can act as pioneers in their industry, creating innovative products and services that disrupt their markets.
