As companies navigate our current “economic winter” I wish more emphasis would be placed on the small-and-medium sized business sector and entrepreneurship as keys to jump start the recovery to catapult us into the next “economic spring.”
It’s a fact that small-and-medium sized businesses (or enterprises, also defined as SMBs and SMEs) definitely help the economy.
More than 98% of all U.S. businesses are considered SMBs, and those companies are responsible for more than 45% of all private payrolls and 80% of the new jobs created over the past decade.
SMBs are big business, and more than carry their weight in the business arena. In fact, they are the business arena.
This includes companies in the franchise sector as well. The latest data from that category shows that for every $1 million in lending obtained by a franchise, 34.1 jobs are created and more than $3.6 million in total economic output is generated.
The entrepreneurial sectors can only help our recovery, as SMBs have paved the road to recovery out of every modern recession – and they will in this one too.
Not only is the formation and profitability of small businesses one of the leading indicators of the strength of the economy, strong SMBs indicate the overall health of a vibrant and innovative economy.
SMBs have been at the forefront of technological and managerial innovation over the past 50 years.
Working with limited resources and a lot of intellectual capital, companies from Microsoft and Intel to Apple and even Google all started out as SMBs and leveraged themselves into huge brands.
On a smaller scale, local florists, bakers, car dealers and plumbers have found ways to incorporate technology (some with little more than a single computer and a word processing or spreadsheet program) to streamline their operations, cut costs and deliver product profitably enough to grow and expand.
SMBs have to.
They have no choice but to operate as efficiently as possible if they want to stay in business. Those lessons – from guerilla tactics on the sales and marketing side to new ways of using existing resources to distribute product or track inventory – have proven to be great case studies for the corporate world. They also serve as inspiration to new entrepreneurs looking to “boot strap” their own operations to success.
While all of the economists and media pundits look at hundreds of indicators to gauge the health of the economy, keep an eye on the SMB sector. When that starts to grow and profit, the current economy will have definitely “turned the corner.”
What will that mean for jobs?
As long as there is a growing SMB sector, new jobs will continue to be created – not only within each SMB, but in every company and vendor that SMB comes in contact with.
So, watch the SMB sector.
SMBs are the backbone of any market economy – even in this economy. In the end, they will persevere and succeed. That’s what makes “small-and-medium sized businesses” so big.