Small Businesses and Their Economic Success

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Small businesses have always been an integral part of the economy, contributing to job creation and economic growth. Over the last decade, small businesses have faced a variety of challenges, including economic downturns, government regulations, and evolving consumer preferences. Despite these difficulties, small businesses have continued to play a significant role in driving economic success. In this blog, we’ll examine the level of success small businesses have achieved in the economy over the last decade and how JOBS Act regulations have impacted this success.

 

The Role of Small Businesses in the Economy

 

Small businesses are often referred to as the backbone of the economy. According to the US Small Business Administration (SBA), small businesses account for 44 percent of US economic activity and employ nearly half of the country’s private sector workforce. In fact, there are 33.2 million small businesses in the United States and they created 8.7 million jobs created between March 2020 and March 2021. Small businesses also contribute to innovation and competition in the marketplace, which in turn drives economic growth

 

Small Business Challenges and Successes

 

Over the last decade, small businesses have faced a variety of challenges, including the great recession, rising costs, and increased competition from online retailers. Despite these challenges, small businesses have continued to achieve success in the economy. With eight out of ten small businesses having no employees and 16% of small businesses having up to 19 employees, this sector of the economy is mostly driven by individuals who can take risks and innovate for growth.

 

Meaning, small business growth often depends on entrepreneurs’ risk-taking capability and ability to identify profitable opportunities. Additionally, the passage of the JOBS Act in 2012 has enabled small businesses to access capital more easily than ever before. The act allows businesses to raise money from investors without having to register with the Securities and Exchange Commission (SEC). This allows smaller organizations that are still private to raise millions of dollars in capital while tapping into a much wider pool of potential investors.

 

The Impact of JOBS Act Regulations on Small Business Success

 

The JOBS Act allows companies to use SEC exemptions from registration, which include:

 

  • Reg CF to raise up to $5 million
  • Reg A to raise up to $75 million
  • Reg D to raise an unlimited amount of capital

 

These capital-raising methods allow small businesses to access a much wider pool of potential investors, obtain higher levels of capital, and achieve greater success in the economy. By allowing organizations to tap into an audience of investors they would have not had access to previously, the JOBS Act has enabled small businesses to build relationships with their customers, grow their operations, and create good jobs in local economies. With the continued support of government regulations and technological advancements, small businesses are poised to play an even greater role in driving economic success in the years to come.

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