In a recent interview on Barbara Weltman’s “Build Your Business” Radio Show, Anita Campbell of Small Business Trends shared some interesting statistics about small businesses.
She mentioned that roughly 79% of US companies have no employees. Yet, these same businesses, over 25 million, provide full or part time employment for their owners. So, why does “everyone insist that these types of small businesses don’t contribute to jobs?” Campbell says that they should be counted. After all, that’s 25 million people NOT in the unemployment line.
She adds that jobs aren’t everything-when measuring the impact of the smallest, small businesses. Regardless of what you think of their impact, single employee companies contribute to our economy as they buy products and purchase services. Their income producing measures and give and take in the flow of commerce deserves consideration. More than the pejorative title, “non-employer” businesses, given to them by the government. Income for 25 million people is nothing to ignore or down play.
In contrast to the government, Barbara Weltman suggested a different name, “micro-businesses.” Any ideas of your own?
THE INVISIBLE BUSINESS
Today is the era of the “invisible business”. According to Campbell this is the company that
- operates out of someone’s home,
- has no separate office outside of the home,
- has low overhead and limited infrastructure, as well as
- few or no employees.
No, they are not structured like traditional companies, but they solve problems like all successful businesses do and over time they will probably redefine what “traditional” business is. Because of the internet and other factors, these companies are here. They contribute even though they don’t appear to be large.
NATURAL SELECTION
Of the thousands of micro businesses that start each year, only 50% still exist after 4 years. After 10 years the survival rate drops to 29%. However, the fact that there is a 71% failure rate isn’t necessarily a bad thing. As Anita Campbell says, “Some things die. Other things grow…It’s the natural order of things.”
Every year all types of companies start up and others go out of business. It’s one of the ways that entrepreneurs learn-from mistakes. Some famous entrepreneurs have failed repeatedly before becoming wildly successful. She suggests that we consider HJ Heinz, who went bankrupt first and went on to create a successful business afterwards.
It happens in small businesses and large corporations alike. Large companies sometimes go out of business, close down or sell off unprofitable units or product lines.
Check out the entire radio show for more details about the Average American Small Business and Startup.
Scott Shane provides additional statistics on the subject at SmallBizTrends.com. He lays out data on Startup Failure Rates and What the Average American Business Looks Like.
