The Role of Small Businesses in the Economy

SMBs are a very important sector of the U.S. economy. For the purposes of simplicity and consistency, we define a small business as having less than 500 employees in all of the industries or business locations in which the firm operates. Eventually some small businesses grow to become large businesses. Importantly, small businesses are a dynamic force in the economy, bringing new ideas, products, technology, processes, and vigor to the marketplace. They fill niche markets and locations not served by large businesses. Large firms, on the other hand, generally provide stability to the economy.

The differences in the small- and large-business workforces are, at least in part, a result of the inherent differences ...

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