American Express OPEN said it best on their recently created Small Business Saturday Facebook Page:
“First there was Black Friday, then Cyber Monday. This year, November 27th is the first ever Small Business Saturday, a day to support the local businesses that create jobs, boost the economy and preserve neighborhoods around the country. Small Business Saturday is a national movement to drive shoppers to local merchants across the U.S.”
Whereas most media attention is focused on Black Friday and Cyber Monday as an economic indicator, there are those who believe the true measure of how the economy is performing is to look at the vitality of small business. The idea of supporting local businesses is resonating. The Small Business Saturday Facebook Page was just created this month and already has over one million people “liking” it.
Small business (defined by the SBA as locally-owned enterprises employing less than 500 employees) is the engine driving the U.S. economy. Did you know 99.7% of all US-based businesses are small businesses? Small firms accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009. Much of the job growth is from fast-growing high-impact firms, which represents about 5-6 percent of all firms. According to the US Commerce Department, there were over 27 million small businesses operating in 2009.
Open/Closed For Business
An estimated 552,600 new employer firms opened for business in 2009, and 660,900 firms closed. This amounts to an annual turnover of about 10 percent. Nonemployer firms have turnover rates three times as high, mostly because it is much easier for them to go into business and cease operations.
Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Census data report that 69 percent of new employer establishments born to new firms in 2000 survived at least 2 years, and 51 percent survived 5 or more years. Survival rates were similar across states and major industries. Bureau of Labour Statistics data on establishment age show that 49 percent of establishments survive 5 years or more; 34 percent survive 10 years or more; and 26 percent survive 15 years or more.
Why It’s Important to Support Small Business
Living in the era of corporate bailouts and tax incentives, it’s important to remember the majority of small business owners are largely dependent upon their own ingenuity and creative financing to not only stay afloat but grow their business.
The success of small business is the key to economic recovery. If you want real job creation (that stays local), and your local economy to prosper (on average $68 of every $100 spent at a locally owned small business goes back into the local economy), then it makes good sense to shop local. Programs like Chattanooga’s Buy It Downtown aim to keep money in the local economy.
The strength of small business lies in it’s ability to provide personalized customer service, and rapidly deploying new products/services. By identifying trends and remaining agile, small businesses are more adept at capitalizing on opportunity than their larger corporate counterparts. Much like a speed boat running circles around an ocean liner, small businesses are capable of running rough shod over big business when it comes to innovation and overall customer experience.
American Express may have packaged together Small Business Saturday, but they’re not the owners of the idea. The National Federation of Independent Businesses (NFIB) has been busy promoting it as well. As always, the ultimate power lies with the consumer. Here’s to supporting ingenuity, determination and the spirit of entrepreneurship.
(statistics courtesy of the United States Small Business Administration)
Video courtesy of FOX61-Chattanooga