Do Small Businesses Create Jobs?

Small businesses are in the spotlight as governments rely on them to create jobs. Small businesses are seen as important creators of jobs and resilient enough to survive the changes taking place in the economy.

Yet, small businesses are not immune to the current economic downturn and so it is useful to see how they can be supported.

The starting point lies in the realisation that although small businesses come in all shapes and sizes their ability to create jobs comes largely from the growth companies within the wider population.

Growth companies are a rare breed and to understand them it is useful to understand more about small businesses in general. For instance:

–       all small businesses want to do business and make profits but not all small business owners want to grow

–       many small businesses grow to a certain level and don’t stretch beyond their comfort zone

–       all small businesses are important to the economy but not all small businesses create jobs at the same rate

–       many small businesses create an initial number of jobs and level off once established in the market

–       many of the small businesses that create significant numbers of jobs are young businesses in their first five years

–       some small businesses grow in their early years but many create modest levels of employment

–       small businesses that grow and create high numbers of jobs come from all sectors and are not limited to high-tech or digital media.

Similarly, the intentions and ambitions of entrepreneurs vary widely and influence the number of jobs created.

Some entrepreneurs start businesses with the intention of limited growth, as they provide local markets and create relatively low levels of employment.

Others start with the intention of growing to a certain size and level of profitability and then selling the business to start again.

Some entrepreneurs start businesses with the ambition of growing fast and building long-term sustainable growth businesses.

SO, all small businesses are vital to the economy but not all small businesses are equal when it comes to the number of jobs they create.

What do you think? Do small businesses create jobs? Get in touch, we would love to hear your views contact Nick on 028 8224 9494 or via Twitter @nick_oec.