How Do Small Businesses Help the Economy?
With independent business growth on the rise, how are these businesses helping the economy? Learn how choosing to shop from independent business can have both charitable and economical benefits.
Despite a challenging period for small businesses, many people are still introducing their new enterprises to the world. Recently, there has been a massive influx of new business applications. In 2021, nearly 5.4 million new business applications were filed with a predicted growth of up to 17 million in 2022 according to Intuit. As more owners enter the market, more benefits are added to our country's economy the economic benefits of small business grow. But how exactly do independent businesses help our economy as a whole?
According to the Small Business Administration, small companies generate 1.5 million jobs a year and account for 64% of new jobs in America. Small businesses also contribute 44% of the U.S. economic activity, so as the number of new businesses grows so does their economic contributions.
Small businesses help support the local economy - By shopping small, people not only help up-and-coming business owners but also their local economy as well. If a person were to spend $100 at a local business, it’s estimated about 68% of that stays within their local economy. If they spent that same amount at a large business around 48% would stay within their local economy. Independent businesses provide their local economies with new jobs, products, revenue, services and more.
Charitable and innovative contributions - Small businesses not only contribute economic benefits to their community but also charitable and innovative ones as well. Research shows that 52% of small business owners donate to charity, with 42% of that portion donating up to $1000. Along with their charitable donations, independent businesses also produce 16 times more new patents per employee in comparison to large patenting firms, according to the Small Business Administration.
Boosts environmental sustainability - Independent businesses not only provide economic benefits, but environmental ones as well. Big national chains can cause a large environmental impact because they outsource many of their products, which requires a lot of transportation. Small businesses often source their products locally which is more sustainable and helps reduce the environmental effect caused by vast amounts of transportation.
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