25 Million Small Businesses May Have Zero Employees, But They Contribute to Our Economy

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.

25 million small businesses have zero employees

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.

4 Comments 25 Million Small Businesses May Have Zero Employees, But They Contribute to Our Economy

  1. Virtual office assitant

    Hi,
    We do virtual assistant services and come under the category of doing work from home. We have very few employees but we give quality service to our customers. And thanks for taking people like us into considerations and it always motivates us to do better.

    Reply
  2. Stephanie LH Calahan (@StephCalahan)

    Thanks for the post. There is quite a stigma for those that work out of their home. I find it amazing that many still think these businesses are not viable contributions to the economy. What many don’t realize is that companies like Apple and Ford started in garages and basements!

    Many of my clients have work-from-home businesses. They contact us to help them improve efficiencies and develop processes so that they can be more productive. They are very serious about their work and making a positive difference in the world. Many have staff, but employ in different ways. Often micro-business hire other micro businesses as well as more traditional businesses. Here is an example:
    I work with a marketing consultant that serves large corporations. She provides them advice that allows them to have successful marketing campaigns, make big sales and employ large numbers of people. She works out of her home because when she consults, she goes to them. Why pay overhead when no one sees the physical location? She hires
    - virtual assistants to do her bookkeeping and some administrative tasks,
    - programmers to build websites
    - local brick and mortar printers to print collateral for clients
    - conference centers for her seminars and other client events
    - contractors for design work
    - writers for content
    - cleaners to maintain her space
    - etc.
    She has many people on her staff, but they just look different than traditional employment. The people she hires are just as dedicated and maybe more so than employees and she only pays them for the time they actually produce work. She works smart and lean so that she can keep costs more economical for her clients.

    What many also don’t recognize is that there are a number of 6 and 7 figure income earners working out of their home. Where they are not employing traditional employees, they are donating to community and global non-profits to make the world a better place to live.

    Yes, there are some businesses ran out of the home that are more hobby than business and many fail, but I would venture to guess that the same can be said for those businesses that launch outside of the home too.

    Thanks again for sharing the stats and the interview.
    To your success
    Stephanie

    Reply
  3. Glenda

    These evidences really proves that a small business, even with little man power can still contribute to a country’s progress. Some are having solo-preneurship but they can still handle everything. I appreciate those persons.

    Reply
  4. ABC Buses

    Small businesses prove to be the backbone of our economy. 79 percent, or 25 million companies have NO employees. What percentage have, say, less than 10 employees? Obviously the percentage must be higher still. And given that, they are going to be buying and selling products and services, without need of a larger business to employ them. It would arguably be a greater disruption to our economy if all small businesses disappeared, as opposed to the larger ones. This is especially true given the ability to buy and sell products and services online.

    Reply

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