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- The Big Impact of Small Business
The Big Impact of Small Business
City of Burlington
Economic Development Office
November 1, 2022
You may sometimes hear that small businesses are the backbone of the United States economy, but what does that really mean? According to the Small Business Administration (SBA), small businesses accounted for 44% of U.S. economic activity annually before the onset of the COVID-19 pandemic, creating two-thirds of net new jobs.
In terms of driving innovation and competitiveness, entrepreneurs are hard to beat. Let’s take a look at the true impact of small businesses in the U.S., their impact on the economy, and what resources have become available in a post-COVID-19 world.
What is Considered a Small Business?
According to the SBA, a small business is either defined in terms of the average number of employees over the past 12 months, or average annual receipts over time. A small business defined by firm revenue – typical for non-manufacturing businesses – must make under $7.5 million annually. If a business is to be defined by its number of employees, it must have 500 employees or fewer. Though an overwhelming majority of small businesses have less than even 100 employees, manufacturing companies can also classify as small businesses if they remain under the 500-employee maximum.
Small businesses have a significant economic impact at the local level. Not only do the simple profit statistics prove this point, making up almost half of the total economic activity nationwide (44%), but small businesses also inspire competition, innovation, and entrepreneurship where large businesses cannot. Small businesses are pivotal in terms of job creation – in the last 25 years, small businesses created a net 12.9 million new jobs (66% of all jobs created). Additionally, small businesses can adapt to challenges and change much easier than large businesses. With tight-knit employees and smaller communication channels, entrepreneurship and innovation encourage the testing of new methods and operations.
Burlington’s Small Businesses
Data retrieved from Data Axle-Reference Solutions.
Burlington is home to 4,479 verified business entities, which vary in size, sales volume, industry, and origin. Historically the city was home to many textile manufacturers, though it has now expanded its industrial reach to also include other industry clusters such as advanced manufacturing, aerospace, life sciences, and food manufacturing. Whether the company was founded here, or has chosen Burlington as its next destination, you can definitely say business is good.
Of course, not every business entity has employees – some entities are created to hold real estate, for example, and never intend to hire anyone. For the sake of this blog, we’ll consider the universe of business entities in Burlington that have at least one employee – 3,912. Of these businesses, an impressive 3,851 (85.98%) businesses have less than 100 employees. At the upper end of the spectrum, 56 (1.46%) businesses have between 100 and 499 employees; at the lower end, 2,235 (59.45%) businesses have between one and four employees. To put this into perspective, the data is reflected in the chart below:
Given the numbers, there is no question to the foundational strength that small businesses lend to Burlington’s economic activity. Within the downtown Municipal Service District, there are over 100 small businesses – everything from dining to health and wellness, photography to real estate. Throughout the rest of Burlington, small businesses can be anything from the car shop down the road to the stores in the Alamance Crossing shopping center. From the industrial perspective, small businesses include the suppliers to the manufacturing giants in North Carolina – the laboratories and biotechnology centers that support the Research Triangle, or the metal and electrical companies partnering with the Toyotas and Boom Supersonics of the Carolina Core area.
The Larger Scale
During the COVID-19 pandemic, small businesses were disproportionately impacted. Metropolitan and coastal areas were hit the hardest due to stark declines in tourism and the disruption to general business. Furthermore, disproportionate metropolitan impacts contributed to differences across demographic categories, with Black and Asian business owners suffering the most. In the first two quarters of 2020, right at the start of the pandemic, 9.1 million jobs were lost – businesses were facing unprecedented economic strains, and many had no choice.
But, in the following four quarters, Q3 of 2020 through Q2 of 2021, small businesses created 5.5 million jobs, a 60% recovery from the pandemic-era decline. It just goes to show how integral small businesses are to the U.S. economy and underlines how important supporting small business is.
To this end, there have been significant efforts by federal, state, and local governments to help small businesses recover after the financial setbacks caused by the pandemic. The U.S. Treasury, for example, just announced it will grant North Carolina up to $201.9 million under the State Small Business Credit Initiative (SSBCI) originally established in 2010. Programs such as these have been set up to aid small businesses in their access to capital, the most common barrier to starting a business, as well as other programs for workforce training, business retention, and overall business success.
Resources for Entrepreneurs and Employers
Whether a business has been in operation for six months or six years, there are countless ways to find business and entrepreneurial assistance. Listed below are some of the most prominent organizations focused on small businesses and helping them thrive in today’s market, starting from the federal level to the local level:
- Small Business Administration (SBA): The SBA is an independent agency of the United States government that provides support to entrepreneurs and small businesses. Their mission is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters" through access to capital, contracts, and counseling. (site link)
- North Carolina Small Business and Technology Development Center (SBTDC): The SBTDC is North Carolina’s leading resource for growing and developing businesses. They are administered by N.C. State University on behalf of The University of North Carolina System and operated in partnership with the SBA to offer counseling and opportunities to small businesses. (site link)
- Carolina Small Business Development Fund: The Carolina Small Business Development Fund is a nonprofit and certified community development financial institution (CDFI). They support small businesses by providing small business loans, training, and research to support entrepreneurs. (site link)
- Economic Development Partnership of North Carolina (EDPNC): EDPNC is a state-wide economic development organization focused on businesses of all sizes in North Carolina, with staff for business expansion, growth, international trade, and entrepreneurship. There are regional managers who are experts in certain areas of the state to best fit the different business climates. (site link)
- Small Business Center through Alamance Community College: The Small Business Center serves as the local business counseling center for Burlington, North Carolina. Staff will help get you connected with resources and tools proven to help businesses prosper and increase profitability with business counseling, business workshops, and online classes. (site link)
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Isabella DeLaGarza, EYOS Fellow
425 S. Lexington Ave.
Burlington, NC 27215