Small Businesses Are Important to the Economy

Small businesses are critical to the U.S. economy. While most politicians and the public say they agree with this statement, small businesses are excluded from economists’ macroeconomic models, and often exert less influence in Washington policymaking circles. Yet small businesses contribute disproportionately to job creation and innovation. Small businesses support a vibrant middle class and strong communities, providing a pathway for social mobility. The ability to start and own a small enterprise embodies the American Dream. However, not all small businesses are the same. The author describes a new categorization of small businesses comprised of four distinct segments: sole proprietorships, Main Street, supply chain, and high-growth businesses. Each has different needs, particularly with regard to access to capital.