Do you own or work for a small business? If so, you are not alone! Small businesses employ over 77 million people in this country. If the American small business workforce was a country, it would rank 20th in the world in population, ahead of Thailand and right behind the Democratic Republic of Congo.
According to the SBA, the definition of a small business depends on what industry you are in. Generally, having 500 employees or less allows you to classify as a small business (although that seems very large to me). There are many exceptions though, including one for air-conditioning manufacturers that allows them to employ up to 1,250 employees and still classify as a small business. Being classified as a small business under these standards is important if you are trying to obtain government contracts.
There are approximately 28 million small businesses in the United States right now, and 22 million of those employee only the owner. Over half of all small businesses are home based businesses.
Right now, there are a number of headwinds facing small business, and this is reflected in the NFIB’s Small Business Optimism Report. Since 200, the average reading for this report has been about a 96. As of last month, the report was at a 92.9, down from 100.3 in December of 2014. This is well below the reading of 107.4 that was reached in 2005.
The biggest reasons given to the NFIB for a lack of optimism in small business owners have to do with taxes (22%) and government red tape (21%). Rounding out the top five are Poor Sales (13%), Quality of Labor at (12%), and Cost of Insurance (8%).
The 2016 State of Small Business Report says that half of small businesses say that the government is not doing enough to support them, while 10% say they don’t want the government involved. I know which camp I am in. Small business owners tend to think that a Republican win in November will be better for them. This report lists the top five challenges facing small businesses as hiring new employees, increasing profit, healthcare, growing revenue, and cash flow.
With all this negativity and pessimism about the future, you would think that small businesses wouldn’t be growing, but they plan to. 52% of small businesses plan to hire in 2016, which is 82% more than 2015! The last four years have been pretty good to small businesses, as it marks the fourth year in a row they have increased their profitability.