Guest Post by: Mike Brown, Research Analyst at LendEDU
Small businesses form the backbone of America. According to the United States Small Business Administration (SBA), small businesses create 2 out of 3 new private-sector jobs, accounting for 62 percent of these positions since the end of the Great Recession. Defined as an independent business with fewer than 500 employees, there are 30.2 million small businesses in the United States. They represent 99.7 percent of all employer firms in the United States.
Although small businesses may not generate as much revenue as large corporations, they contribute strength and vitality to local economies. They offer employment opportunities in communities across America, and bring growth and opportunity to their towns and cities. For these reasons and more, small businesses are incredibly important to our country and our economy.
The Most Recent Small Business Trends in the U.S.
According to Small Business Expo, there are a number of recent small business trends in the United States that have changed the way many companies may operate. From government regulation to the way that Americans live, shop, and work, these trends will have a significant impact on how these businesses function.
One of the biggest trends is the use of technology in daily business. Over 70 percent of respondents stated that they currently use applications (apps) in their business, with nearly 50 percent reporting that they plan to introduce apps in the coming year. Other technologies that small businesses currently use or intend to use include voice search, artificial intelligence, chatbots, virtual reality, and augmented reality. This represents a marked change from how many businesses operated even 10 years ago, making the use of technology almost mandatory for success.
Similarly, most small business owners agreed or strongly agreed that the U.S. is currently experiencing a brick and mortar “retail apocalypse.” In other words, because of the use of technology — particularly online shopping — it is harder for businesses to maintain physical storefronts. Many consumers prefer to shop online and so businesses have to adapt.
This brings up a related point: a majority of small business owners either agreed or strongly agreed that the Supreme Court’s ruling requiring online retailers to collect sales tax will negatively impact small businesses. While many people associate small businesses with stores, like a corner grocery, in 2018, many small businesses are online only. That means that tax issues such as these are particularly important.
Finally, in what many people will see as a big departure from years past, most small business owners today believe that diversity is an issue in their workplace. This shows that many small business owners are aware of consumer needs and issues — and want to address them to better serve the needs of their clientele in 2018.
Which Cities in the U.S. Are the Best for Small Business Growth?
If you are looking to start a small business, there are cities that are better than others. LendEDU recently ranked the top 500 cities in the U.S. based on their receptiveness to new business. These cities were ranked based on their population score (maximum of 20 points), income score (maximum of 40 points) and expense score (maximum of 40 points).
So where should you move if you are looking to start a small business? Look west — or south. The top two cities are in North Dakota: Dickinson and Minot. Dickinson received an overall score of 82.79, receiving particularly high marks for its low cost of living and high income. Minot received a score of 82.78 for the same reasons. Rounding out the top 5 were three cities in Virginia: Stephens City, Forest and Fredericksburg. Each received a relatively high income score and low cost of living. This gave them overall small business scores of 81.07 (Stephens City), 80.33 (Forest) and 80.21 (Fredericksburg).
Rounding out the top 10 cities for small business were Rockville Maryland (79.77), Mechanicsville, Virginia (79.54); Elizabeth, Colorado (79.28); Harvest, Alabama (79.16) and Williston, North Dakota (78.49). And just for fun (and because who doesn’t want to live in Hawaii), number 11 on the list is Ewa Beach, Hawaii, with a score of 78.44.
Why Are Small Businesses Important?
Small businesses drive our economy, employing countless people across the country and in our towns and cities. They make up much of our local tax base, and often help to support the schools, nonprofits and other institutions that are important to us. They also help to make our communities thrive, giving us a place to shop, to have our cars fixed, our hair cut, or to get our taxes done. Their importance cannot be understated, particularly in the way that they drive innovation and employ many people who might not be able to obtain jobs with large corporations.