Question

explain the importance of small business to the American economy

Answer 1

The business of less than 500 employees is a small business. The presence of small businesses is highly important in any sort of economy. American economy is not out of it. Out of the total number of businesses there are 99.9% small businesses in the country.

Required importance:

No.1) Job opportunity: small businesses as a whole create more job opportunity than big businesses. There are around 59 million employments in the country during the year 2018.

No.2) Gross Domestic Product (GDP): Although they are small but collectively they make big. Most of the GDP of the country comes from this source. It is around 54% contribution out of the whole GDP.

No.3) Local development: Most of the small businesses are operating locally (like local potato chips company, local cable TV business, etc.). They act like a neighbourhood in their society and work for development – like making park, road, and hospital.

No.4) Innovation: Since they are small they want to become big. In the process of doing so they constantly look for innovation – such as how to improve product quality. Because, they know if this has been done they can increase their market share. Ultimately, it benefits the economy – such as people get higher quality product and can improve their standard of living.

No.5) Help to big businesses: Small businesses help big businesses by supplying components (like, spare parts of a big product), becoming a sales agent (like, automobile dealership), etc. Without such helps a big business can’t run successfully.