The Sole Proprietors and Small Businesses of America
An American Cliché…
How many times have you heard that small businesses are the “backbone of the American economy”?
It has become an almost permanent slogan of nearly every politician from the local to a national level – a required afterword tacked onto to stump speeches and responses about our competitive and diverse economy. Whether it be “Mom and pop shops”, “family-owned companies”, “local businesses”, or “Main Street America” – our national discourse often seems saturated with this concept of the American small business.
This overused cliché has undermined the true value of this workforce – because in reality, small business is America's business.
Through their overall share of the total number of U.S. businesses, the opportunity for work they provide and their immeasurable value to American communities through engagement and development of local economies – small businesses fuel America.
And an essential component to this contingent of small business owners and workers is the work and input of sole proprietors — Independent Workers operating often by themselves or with very few additional workers – innovating and advancing the American economy through their unique and valuable style of work.
At iPSE-U.S. we recognize the nearly 25 million sole proprietors who make up HALF of all of the small businesses in America, and we believe this massive chunk of the small business workforce deserves their own day of recognition.
99.9%
How much of American business is made up of small businesses? Well according to the U.S. Small Businesses Association, not just a majority, or an overwhelming majority – nearly 99.9% of all businesses are small businesses. This number includes all businesses that use 500 workers or less (with the definition varying slightly by industry).
Now, to a lawyer, a taxi driver, or an owner of a restaurant – 500 workers does not seem very “small”, but that powerful majority exists even at lower worker counts. For small businesses that have 20 workers or less, they still make up nearly 90% of all American businesses.
This adds up to nearly 30 million small businesses with over 59 million workers. And with over 25 million of that total number of workers operating as sole proprietors – its not difficult to see the value of Independent Work to the “backbone of the American Economy”.
Self-Employed Sunday
Therefore, in the midst of this holiday season, why not recognize the value of your work and your contributions to this American economy?
As a self-employed sole proprietor, you offer your intelligence and expertise to our economy, your talents to customers and businesses -- you fuel American ingenuity and innovation through your work, and you help to create character, stability, and growth among local communities.
We believe you deserve recognition for your work.
Because you are a part of America’s independent workforce that represents nearly HALF of all of America’s small businesses – working in every industry from information technology to healthcare to retail.
Data and Stats: Small Businesses and Independent Work
Millions of Americans own or work for small businesses. Their contribution to the U.S. economy is often viewed as essential to our strong and diverse economy. As “the backbone of America”, small businesses do not simply operate as providers of services and products, but instead, are directly connected to the communities they are established in. Their contributions are immeasurable to local communities through creating stability, establishing character and providing jobs and purpose to millions of Americans.
America's business is small business
In the United States, there are 30.2 million small businesses, making up an incredible 99.9% of all U.S. businesses, comprised of nearly 59 million workers. And 23-25 million are full-time Independent Workers operating as sole proprietors.
This number is estimated by the Small Business Administration which establishes the numerical definitions or “size standards” for small businesses. Generally, any business with fewer than 500 workers is defined as a small business.
But with such diversity in both revenue and size by different industries, no single number of workers or dollar amounts can differentiate small businesses from larger companies.
Therefore, the SBA has set the following industry standards:
Agriculture: Maximum of $750,000 in annual receipts
Manufacturing: Maximum # of workers ranges from 500 to 1,000
Wholesale Trade: Maximum # of workers ranges from 100 to 250
Retail: Maximum # of workers ranges from 100 to 250
IT: Maximum # of workers ranges from 500 to 1,500
Too large of a share?
With maximum worker numbers ranging from 500 to even 1,500, these businesses may not seem very “small” to a firm of a few individuals or Independent Workers.
However, it is essential to note:
· Small businesses with fewer than 100 workers make up 98.2% of all businesses,
· And firms with fewer than 20 workers make up 89.6% of all U.S. businesses.
Factor in the nearly 23-25 million full-time Independent Workers who run their own individual business with their specific skills and talents – this becomes a massive contingent of workers who are essential to our economy.
Driving Job Growth
According to the SBA, small businesses accounted for 61.8% of all new jobs created from 1993 to 2016. They are responsible for a majority of the hiring’s that continue to occur in this strong economy.
GDP Contribution
Small businesses account for nearly 44% of U.S. economic activity. The title of the “backbone of the American economy”, is more than appropriate. Most studies and estimates place their share of the American economy anywhere from 43-48%, (2008 reduced their share).
Small Business is America's Business
· Small businesses make up an overwhelming majority of U.S. businesses with most being smaller than 20 workers.
· They generate nearly 44% of all economic activity within the United States.
· Small businesses have driven the hirings and job growth of the two most recent decades.
· And their contributions to local communities often outweigh the revenue and economic valuations of these establishments.
And finally, it is essential to note that Independent Workers often are included in these estimates of small businesses.
As full time independent often operate as sole proprietors, nearly 23-25 million of them are included in this valuable demographic of workers who make the American economy the largest and most competitive in the world.
Sources:
· SHOPIFY. What is Small Business. https://www.shopify.com/encyclopedia/small-business
· Small Business Administration. Office of Advocacy. https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2017-WEB.pdf
· Small Business Administration Size Standards 2016. https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf
· Small Business Administration Office of Advocacy. https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity/
· IRS – IRS Tax Statistics on Sole Proprietorships https://www.irs.gov/pub/irs-soi/soi-a-inpr-id1905.pdf