The Small Business framing paper provides an overview of why small businesses are important to regional economies, a framework for thinking about the types of small businesses, and some suggestions for practitioners about how to think about supporting the growth of small businesses.
This emerging focus on small businesses in The Integration Initiative (TII) is appropriate considering the pivotal role that small businesses play in the economy:
- Jobs – The vast majority (almost 99%) of all US firms are small businesses. They employ half of the private sector workforce and are the source of most net new job creation
- Place-making – Small businesses like restaurants and specialty retailers can contribute to the vibrancy of a place by providing needed goods and services, generating foot traffic , and helping define the identity of a neighborhood by catering to unique niches such as minority or immigrant communities (e.g. Seattle’s International District, Boston’s Little Italy)
- Municipal tax base – through sales and income tax, small businesses support the provision of essential public services
- Wealth creation – small businesses can increase personal income and wealth. For example, women-run households have average family incomes that are less than half of the national average. Yet, in 1998, the average income of female-headed households with a business was $60,892, compared to an average of $23,941 for female-headed households without a business. Additionally, small business can help generate community wealth by capturing economic activity that would otherwise occur outside of the community.