According to the Small Business Administration, there are 28 million small firms in the U.S. On its face, that number proves that small business in America is actually quite big. Indeed, as I’ve proudly pointed out in this space for the past 20 years, the small business sector is responsible for creating half of the U.S. economy, and employs over half of all private sector employees. Nothing diminutive about that.
Just as it’s instructive to segment big businesses into categories, it’s also handy to put that 28 million number into perspective. The prime calculation divides small firms in two, 80/20: 22 million individual operators with no employees, and about 6 million entities with between 1 – 500 employees. Five hundred is the SBA’s line between large and small business.
Speaking of employees, it’s more than noteworthy to recognize that almost 90% of small employers have less than 20. And not to take anything away from larger small businesses, but that greatest cohort of small employers represents the big gear in the Main Street economic machine. And it’s the posterchild for capitalism writ small: a locally owned, family run business, providing income for several community residents, while likely being perennial supporters of non-profit entities that round out the rough edges of every community. Oh, and those owners know the names of all their employees’ children.