Which Kind of Small Business Is the Biggest Job Creator?
Forget the Silicon Valley hot new start-up. It's Main Street mom-and-pop shops that are the real job creators--at least, according to Karen Mills, the outgoing Administrator of the Small Business Administration (SBA).
The Washington Post recently tapped Mills as their newest blogger to discuss the role of America's small businesses as job creators.
"Today, there are more than 28 million small businesses in the United States, and those firms create two out of every three net new jobs and amply half of America's workforce," Mills writes in her first blog post.
In her first two posts, Mills has explored four types of America's small business: sole proprietorships, Main Street businesses, high growth, and suppliers.
A majority of small businesses, 23 million, are sole proprietorships. Sole proprietorships are expected to continue to increase with more technology advances allowing for grated geographic flexibility and more workers looking to strike out on their own.
At approximately 4.5 million, Main Street small businesses might be the second most common type of small business, but they rank first as America's job creators. "Main Street businesses make up nearly 70 percent of the jobs in our country," writes Mills.
Among the high-growth firms are the 350,000 start-ups, which Mills says account for just 3 percent of U.S. employment. They are, however, responsible for 20 percent of gross job creation.
Similarly, suppliers who have become "part of commercial and government supply chains" and have established relationships with large corporations have reported revenue growth of more than 250 percent as well as employment increase by more then 150 percent in just matter of years.
The focus of Mills' second blog post was existing establishments, such as Main Street businesses and suppliers. SBA recently reported that existing establishments that are growing have created 8.7 million private sector jobs in one year, between March 2011 and March 2012.
Mills noted that such growth can be replicated and multiplied by providing small businesses with "the right tools, the right opportunities and the right resources to make it happen." Among the tools highlighted by Mills are SBA loans and SBA's intensive entrepreneurship education program.
JANA KASPERKEVIC | Staff Writer
Jana Kasperkevic is a graduate of Baruch College, City University of New York, where she earned a bachelors degree in Journalism and Political Science. She covers start-ups, small businesses, and entrepreneurship for Inc. Her work has appeared in The Village Voice, InvestmentNews, Business Insider, and Houston Chronicle, among others. She lives in Brooklyn.