New Poll of Micro Businesses: Who They Are and What They Do for the Economy

Ben Geyerhahn

They’ve been in the spotlight for months, and the attention small businesses got during the first presidential debate sent them into the stratosphere in terms of media coverage. So let’s try to answer the question a lot of people are asking: who are these small business owners everyone’s talking about?

Despite being one of the most respected constituencies in the country, small businesses are a group that many people understand little about — the very smallest ones, especially. An opinion poll released Tuesday by Small Business Majority, the National Association for the Self-Employed and Association for Enterprise Opportunity, sheds light on the true nature of these businesses and reveals their important role in our economy and its recovery.

In showing who our nation’s very-small-business owners really are, the poll of micro businesses — businesses with 10 or fewer employees — helps counter a number of misconceptions pervading the airwaves. Recent reports, many by organizations polling their membership, have portrayed small business owners as practically devoid of optimism about the economy. But we used a scientific, random sample of small business owners and found just the opposite. A majority of the 470 micro business owners we surveyed are confident about the future of their business and the economy.

Specifically, seven in 10 believe their business will be faring well over the next couple of years and an overwhelming 81 percent of respondents under 40 feel the same way.

Another mistruth floating around is that small businesses aren’t our chief job creators. Despite a lagging economic recovery, micro businesses have been growing and show strong signs they’ll continue to: a 54 percent majority have employed a contractor or 1099 employee in the past year and nearly a third have hired a full-time employee. Fully half of them plan to hire within two years.

Small businesses’ appetite and capacity for growth is supported by employment data. Automatic Data Processing, Inc. calculates monthly job figures and breaks them down by company size. According to ADP, small businesses, as traditionally defined, continue to create the vast majority of new jobs — upwards of 90 percent in 2012. Where has the most notable growth been? The smallest companies, those with 1-49 employees, have been responsible for about 50 percent of added jobs overall.

So where do micro businesses fit into the picture? As it happens, a sweeping 95 percent of all businesses have fewer than 10 employees–meaning micro businesses basically are the picture. Even when counting only the firms that currently employ people besides their owner, those with fewer than 10 employees still represent a whopping 80 percent of employer firms. So all things considered, it’s safe to say small and micro businesses have a thing or two to do with job creation.

Another point of confusion this poll helps clarify is the perception that micro businesses are merely hobbyists selling tchotchkes on the Internet. Rather, nearly three-quarters report their micro business as their sole source of income and 57 percent have been in business 10 years or longer. Micro businesses are clearly real businesses providing a real living for their owners, employees and their families.

As misunderstood as they often are, micro businesses are vital contributors to the economic recovery ahead. They’ve been doing well and growing. This proven success, coupled with their undeniable air of optimism about the future, helps underscore the importance of creating conditions for micro businesses to thrive. Oftentimes, their ability to expand is tied to their ability to access working capital. However, 58 percent of the ones who are in need of that credit to grow and hire say getting it is a serious problem. Just this week the Small Business Administration announced it supported more than $30 billion in loan volume this year — the second largest total ever. That’s great news. Getting capital into small business owners’ hands is one way we’ll dig ourselves out of this recession. But as our poll shows, more needs to be done.

Among other small business issues, access to capital is one we hope to see addressed in the remaining debates. It’s great to see the focus being placed on our 28 million small firms. We just hope it translates into some real good being done for this vital community.