Small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses, according to the U.S. Small Business Association (SBA). Only fitting that there’s at least a month to celebrate and recognize this driving force for the U.S. economy, right? Happy National Small Business Month! As a small business ourselves, HumCap is proud to support and partner with many other small businesses in our community.
The definition of a small business is defined by size, but what factors determine that definition? Number of employees and the amount of money the business makes. The SBA defines a small business by employment numbers (from 100 to over 1,500 employees) and revenue (ranging from $1 million to over $40 million). While ‘small’ in name, there’s nothing small about it – a recent SBA report found that small businesses accounted for 44% of U.S. economic activity.
“According to the latest available data, the top three industries for small business employment are Health Care and Social Assistance; Accommodation and Food Services; and Construction.” – SBA.
While the race for talent is on for every company, large and small, there are a few factors everyone should take into account. Considering that the U.S. economy added 428,000 jobs in April (duplicating March’s increase), the unemployment rate remained unchanged at 3.6%. The job market is competitive, that’s no secret. If you are a small business trying to hire and retain your team, you do have a competitive edge against the larger corporations. You have flexibility, adaptability, and culture on your side. When challenges strike, say, a global health crisis – small businesses are able to pivot and adapt much quicker than larger corporations. While the pandemic effects on the economy linger, formation of new U.S. businesses intending to hire continue to rise to historic heights. Small businesses see opportunity and can act on it. Innovation is built and bred through small businesses – this innovation attracts talent that can lead to invention and new solutions that larger corporations have less flexibility to incorporate. Never forget to use this as an advantage!
The current labor market continues to tighten creating more competition for hiring – small companies with fewer than 50 employees see a struggle to compete with larger companies on salary. Money will always be a competitive driving factor for job seekers, while important, it’s not the only aspect of job seeker’s criteria today. Keep in mind the flexibility and adaptability that small businesses have on their side; implement this into your culture and work environment to meet the other key criteria applicants are currently seeking:
“Candidates are considering such things as company diversity, community engagement, sustainability, and their company’s stances on social issues. Here is where Small Businesses can be ultra-competitive since they generally have more control and greater ability to build a fun, engaging, and meaningful culture easier, faster, and more participatory than the large businesses.” – WSJ.
From improving company culture to staying flexible with rising employment trends (i.e. flexible work hours, hybrid work environment, etc.), small businesses have ample opportunity to stay competitive in today’s labor market and the race for talent. Small businesses have been and will always be a necessary and important driver of our economy. They can compete in this job market, they just need to remained focused on the areas that larger companies can’t do as well. Every day, month, and year, small businesses deserve support and encouragement. While celebrating National Small Business month, take a moment to consider how you can support others in your community! We all are better for it.