How important are small businesses?
By Kelly Weaver, Regional Director, SD Small Business Development Center; reprinted with permission
As I write this article, it is National Small Business Week. What a great time to celebrate small businesses and their importance to our economy! Each year the Small Business Administration releases a Small Business Economic Profile for each state and the United States.
The profiles gather federal economic data into state-by-state snapshots of small business health and economic activity. The following examines South Dakota’s report. Click HERE to view reports for other states.
As it goes with data collection, the 2021 report is based on pre-pandemic data so these numbers will not show pandemic impact. Nonetheless, it is helpful to see just how much small businesses factor into South Dakota’s economy. Here is a glimpse of the small business profile information.
Small businesses . . .
- are defined by SBA as businesses with fewer than 500 employees.
- employ 46.8% of private-sector workers nationally and 58.5% statewide.
- saw job growth of 25.1 % in South Dakota from 1994 to 2018, exceeding the national growth of 20.1%.
How many small businesses are there? About 32.5 million of which 61.2 million were employers (99.9% of the US businesses are small business who employ 46.8% of the workforce). In South Dakota, there were 89,942 small businesses, 99% of all businesses, who employ 210,301 employees or 58.5% of the state’s employees. A large majority (68,405) had no employees, while 18,980 had 1-19 employees and just 2,557 had 20-499 employees. The industries with the largest number of small businesses include Retail Trade, Construction and Real Estate with 10,000 -11,000 small businesses each. Significantly in South Dakota, these metrics do not include ag production.
How many businesses do women own? Women owned 13.2 million businesses, over 43% of all businesses. In South Dakota, 43% of all businesses are also women-owned businesses. This percentage has been consistently increasing over the past decade.
How many businesses do minorities own? There were 9.2 million Hispanic or racial minority-owned firms, roughly 32% of all firms. Firms owned by American Indians and Alaska Natives were the only minority group to experience a decrease in business ownership percentage over the last 10 years. In South Dakota, only about 3,500 Hispanic or racial minority-owned businesses make up just 4.4% of the state’s small businesses.
Do small businesses export their products? YES! Of the 288,063 identified firms who exported goods worth $1.5 trillion in 2019 in the US, 97.4% (280,496) were small. In South Dakota, 881 identified firms exported goods worth $1.2 billion. Of those exporters, 75.9% (669) were small. Small firm exports make up 31.6% of exports in the US and 34.6% in South Dakota.
Kelly Weaver is the Regional Director of the Small Business Development Center in Aberdeen which offers free, confidential business consulting to start up and existing businesses. She can be reached at (605) 698-7654 x 144 or email@example.com. The Center is hosted by GROW South Dakota.