Question by L.T.M. Chill out Francis: Is this where the Obama economic team has failed US?
How important are small businesses to the U.S. economy?
Small firms:
• Represent 99.7 percent of all employer firms.
• Employ just over half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Have generated 64 percent of net new jobs over the past 15 years.
• Create more than half of the nonfarm private gross domestic
product (GDP).
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.3 percent of all identified exporters and produced
30.2 percent of the known export value in FY 2007.
• Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited…….AND…..
So what businesses are not too big to fail? Best I can tell, it must be small businesses. And why should we worry if small businesses fail? Let’s take a look at the numbers.
A recent study by the U.S. Small Business Administration’s (SBA) Office of Advocacy counted 26.8 million businesses in the United States. Of those, 99.9% have fewer than 500 employees and as such are considered small businesses. This means that only one-tenth of one percent have more than 500 employees. Yet, more notable is the fact that according to the U.S. Census Bureau, 98.2% have fewer than 100 employees. And if you are impressed with that number, you may be amazed to learn that in the same report it states that 89.3% of the businesses in America have fewer than 20 employees! Bear with me for just a moment more as I drive this point home. Even more amazing is the fact that 78.6% have fewer than 10 employees and 60.8% have fewer than 5 employees.
Are small businesses just an overflow of the work of big business or do small businesses carry their own weight? Let’s look at the facts.
According to Census Bureau data on high-patent industries, 98% of the companies patenting telecommunications technology employ fewer than 500 people. In the software publishing industry, 97% of the companies patenting software employ fewer than 500 people. In aerospace products and parts manufacturing, the percentage is 92%. In pharmaceuticals and medical manufacturing, it is 90%. In semiconductor machinery manufacturing, 87% of the companies that patent technology employ fewer than 500 people.
It appears self-evident that small business carries most of the weight when it comes to American innovation and job creation. So, why do we allow so many to fail?
Maybe because failure many times leads to innovation. According to Wall street Journal guru, Clayton Christensen, the road to innovation is paved with failure. 93% of all innovation starts off in the wrong direction. Almost everyone knows that the failure rate of small business is legendary. However, after failure, the most successful entrepreneurs keep picking themselves up and starting over until they get it right. Many big businesses keep throwing resources at failing initiatives instead of giving up and going in a different direction. Most small businesses, classically strapped for cash tend to respond quickly to failure by changing directions.
http://bestbizpractices.org/2009/07/14/america-runs-on-small-business/
http://www.sba.gov/advo/stats/sbfaq.pdf
Anyone else notice how poorly small business was represented at Obama’s “Job Summit” ?
Best answer:
Answer by jack sawfullot master debater
yeah, likeus republicans are all going to read all of that
Add your own answer in the comments!
WHy do GOP CLOWNS PROMOTE COMI CHINA WALLFART IMPORTS TAX BREAKS
and OUTSOURCING AMERICAN JOBS
clown
Comment by GopBLissIgnorance — August 21, 2010 @ 6:20 am
Unemployment rate dropped in Nov. and GDP is back into positive territory. ‘Nuff said
Comment by Adam — August 21, 2010 @ 7:11 am
Presidents need to help our economy by doing LESS!!!
Bush lowering the tax schedule when the budget was balanced was the single stupidest thing done in the history of the US. Obama needs to return the tax code to what it was in 2000, reinstate Glass-Steagal and bundling restrictions – and do NOTHING ELSE!
Comment by future — August 21, 2010 @ 8:08 am
Why open a business when the governement rides your butt with taxes?
Why hire more employees? Why claim bankruptcy?
Why try and make more money when you are into a different tax bracket?
Seems like our government likes to punish people who strive to make it in this country. What are the incentives? None? Why even try when the deck is stacked against you?
Comment by dogtear5 — August 21, 2010 @ 8:45 am
grow up and stop crying you lost
Comment by ed — August 21, 2010 @ 9:42 am
Thank our gov for sending our jobs away to China.
Also you libs need to remember that it was SLICK WILLY KLINTOON that signed NAFTA.
Comment by Frank Capo — August 21, 2010 @ 9:57 am
i suspect the real reason (besides an agenda) is the fact that his admin holds the lowest percentage of prior private sector experience out of the last 18 admins……his admin boasts only 8% with prior private sector experience as opposed to an average of the last 18 showing over 45%. the clowns in his admin are government cronies who’ve never owned or ran a private corporation. here’s a jp morgan research report…
http://blog.american.com/?p=7572
Comment by jimwoytek — August 21, 2010 @ 10:20 am
Obama’s economic policies rape small business. No matter how innovative any small business is, they cannot survive under the regulations and tax rate Obama wants to oppose on them. Who can survive if the bulk of what they make has to be paid out in taxes. The profits any business makes generally goes to grow the business. With the government eating up all the profits, what motivation would any business have to continue.
Comment by canam — August 21, 2010 @ 11:03 am
I agree with your premise and everyone’s answers too for that matter, but I think the problems run deeper, and the actions taken by the Fed and the Treasury might make better sense through an expanded view.
When institutional investment capital defensively left the markets and moved to treasuries, Paulson moved to inject capital to fill the void the only way government can distribute it quickly–through cash in the bank. Money is the fuel that keeps American industry moving, and industry gets it from the bank, so the idea was not flawed. Unfortunately, TARP wasn’t used in the ways expected. China, Japan and others were threatening to pull investment out of the US entirely, which would have forced interest rates upward, making Paulson’s move to lower the discount rate ineffective. In short, immediate foreign pressures trumped American business’ needs so the TARP money seemingly evaporated, at least from our perspective. I’m pretty sure it mostly went to China.
The problem underlying everything is the global labor imbalance caused in part by China’s unwillingness to free the yuan from the dollar. In this, Bernanke and Geithner are helpless as they are not in a position to directly negotiate with the Chinese government. When Clinton was president, 300 million Chinese were either living in or had moved into China’s “economic zones.” That represented a staggering influx to the global labor market. Today, there are 600 million Chinese in their economic zones! As you might expect, the need for labor has not kept pace with the rapid growth of the labor pool.
China has clung to the dollar like a bicycler holds onto the rear bumper of a car to get a free ride. Unfortunately, America’s “car” isn’t strong enough to pull 600 million bicyclers. It’s time for America to consider forcing China to free their yuan from the dollar. It’s not just us. Japan, Brazil, South Korea, the European Union and others are all attempting to get China to let their currency float because they also are having labor problems, just like us. China’s anuallized GDP for 3rd quarter 2009 was up 8.9% while the rest of the world struggles.
There are things we could do to force the issue, but none of them are pleasant. It would be best if China simply did it themselves. They would experience a small rise in unemployment, but the rise in employment around the world would fuel the global economy and ultimately increase demand for Chinese goods, this time at a fair market value.
I have every reason to believe Paulson, Bernanke and Geithner know this and are/were dealing accordingly. Bernanke, in my opinion, has moved with a cool head and a steady hand, in an environment where there are no good solutions. Fix the macroeconomic problems, and American Small Business will fix itself, because that’s what we do!
Comment by Pro Con — August 21, 2010 @ 11:43 am
HOOK,LINE AND SINKER!!!! In every way…………
Comment by guanete42 — August 21, 2010 @ 12:42 pm