Small and Midsize Enterprises (SMEs) drive economic growth and social cohesion far more effectively than giant corporations ever could. They are the backbone of most economies. An economy without them would be less dynamic, less innovative, and less free. As the lifeblood of our economy, and the unsung heroes that propel prosperity, I believe it’s time we lay the foundation for them to thrive and, in turn, shape a society where individuals are empowered to take control of their lives and contribute meaningfully to their communities, nations, and, ultimately, the world.
In the United States, small businesses employ 61.7 million people, accounting for 46.4% of the private workforce, and representing 99% of all firms in the country. In addition, they account for over 43% of our gross domestic product (GDP). The European Union (EU) showcases similar numbers, with SMEs comprising 99% of businesses and providing jobs to more than 85 million citizens. In developing countries, formal SMEs contribute up to 40% of GDP. Imagine how this figure would soar if solopreneurs and other informal enterprises were included.
I believe SMEs are the embodiment of American values and represent a global ideal characterized by innovative, engaged, and determined individuals. They encourage competition by bringing new products and services to the market and support social cohesion and local development with their strong ties to communities. Over the years, I have also witnessed just how adaptable SMEs can be, quickly responding to economic changes like those brought by the COVID-19 pandemic. Given all the significant contributions of SMEs to economic and cultural health, it’s imperative that we ensure their sustainability and growth.
Critics may argue that SMEs have not, and cannot, contribute more than industry giants like Apple, Amazon, Pfizer, or Walmart. It’s undeniable how these companies transformed our lives, redefining our buying habits, crafting trends, and shaping our approach to health. Their contributions to technology, culture, and the global economy are so immense that they can’t be overlooked. Still, while their impact is substantial, the role of SMEs in our economies and society as a whole is equally, if not more crucial.
First and foremost, SMEs serve smaller markets than large corporations do. This means they can magnify their impact across diverse demographics, such as rural regions and not just large suburban centers. Their widespread reach translates to economic benefits felt far and wide, touching lives in places big corporations can’t (or won’t).
SMEs help disperse power, which, in my opinion, is not only healthier for our culture but is a core tenant of American society. As an entrepreneur myself, I’ve seen how the concentration of power in the hands of a few has stifled competition and innovation. When this happens, it leads to economic disparity and reduced social mobility. In other words, distributing economic power through SMEs promotes a more dynamic society where wealth and opportunities are spread across the broader population.
Furthermore, SMEs empower individuals to seize control of their lives. While not everyone can become an industry titan like Steve Jobs, Mark Zuckerberg, or Elon Musk, SMEs provide a platform for daring individuals to pave their own paths to success. They offer the freedom to escape large corporations and truly take ownership of their destiny. This opportunity to shift from dependency on large entities to self-reliance is revolutionary. I dare say this bold, risk-taking spirit embodies the very essence of the American ethos.
While the importance of SMEs can’t be overstated, it’s vital we don’t become complacent and expect them to continue thriving without support. Neglecting the SME sector will have disastrous economic and sociocultural consequences. If we don’t help SMEs succeed, we risk concentrating economic and political power, stifling competition, innovation, and individual empowerment. This imbalance, in my opinion, results in economic and regulatory policies that harm SMEs, not necessarily out of intent but as an unintended consequence of legislation crafted for corporate special interests.
To best support the success of small businesses, we must immediately provide them with educational resources and the tools they need to thrive. Many people start ventures blindly, often relying only on their passion. It’s hardly surprising, therefore, that approximately 20% of new businesses fail during the first two years. Consequently, about 45% fail during the first five, and only 25% make it to 15 years or more.
As the engines of economic growth and innovation, we must aid SMEs and provide them with a clear, actionable roadmap that can guide them through the various stages of business development. Reinforcing a systematic approach can help with this. Business owners will have better chances of success if they understand and follow specific priorities and best practices at each stage. They then need access to information, resources, and mentorship. Seeking guidance from those who have already succeeded can provide valuable insights and practical advice that can make a significant difference. Studies have shown that businesses that follow structured growth stages and receive mentorship have higher success rates. Just look at countries like India, which has seen tremendous growth and development due to its innovative roadmap and government policies designed to foster the growth of SMEs in the country.
Ultimately, supporting and strengthening SMEs catalyzes economic and cultural development. As these enterprises elevate their standards, they’re bound to enrich the lives of the people who work within them. Employees in these businesses will grow, develop, and become better versions of themselves, carrying these positive changes back to their homes and communities. With decades of experience as an entrepreneur and assisting SMEs in their own journey, I’m certain that as we help them thrive, we’ll nurture individuals naturally willing to take more risks, leading to a braver, stronger, and freer society.
