We often forget how important the small business sector is to the economy. According to the Small Business Administration, small firms represent 99.7% of all employer firms here in the US and small businesses have been responsible for 65% of all net new jobs over the past 17 years.
The actual numbers are staggering. Roughly 500,000 small businesses open up shop every year. Six million small businesses employ people. In short, small businesses make up such a large portion of the economy that small business success quickly affects the overall employment rate. We’re all hitched to the small business wagon.
The US unemployment rate is at 8.3 percent. That’s around 13 million people looking for work. I don’t pretend to have a silver bullet for this problem, but my involvement in the small business world has definitely given me some thoughts.
Let’s say 10 percent of the six million small business employers start using Xero. With a better view of their cashflow they identify their strengths and weaknesses. After making a few small changes, revenue rises and they each have the resources to hire two new people.
That’s more than a million new jobs.
Giving them staying power
Of the 500,000 new small businesses that open each year, only a third or so (166,000) last for five years or more. What if some of them are able to stick around longer? What if 200,000 out of that 500,000 are still around after 5 years? That’s more than 30,000 more businesses a year hiring people, exporting products and creating wealth for everyone.
This is what makes what we do so exciting. Using accounting software like Xero can unlock growth opportunities for small businesses. Once the domino effect kicks in the ripples might be felt across the entire economy.
What will you do to grow your small business this year?