Small Business PA 3150 Historical Perspective Small Business ✓ Solved

Discuss the historical perspective of small business in America, focusing on key developments from the 18th century to the present. Include information on the types of small businesses that emerged during each century, their role in the economy, and the challenges they have faced. Highlight the evolution of entrepreneurship and the support systems available to small businesses, including governmental assistance and private investment options.

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The concept of small business in America has evolved significantly from the 18th century to the present day. Throughout this historical journey, small businesses have played a crucial role in shaping the economy and embodying the spirit of entrepreneurship. This paper explores the transformation of small businesses across different centuries, their contributions to the economy, and the challenges that have persisted over the years.

Small Business in 18th Century America

During the 18th century, America was characterized by an agrarian economy where small businesses primarily comprised local farmers, taverns, and public houses that catered to the needs of colonial society. These business owners faced immense hardships as they settled in the wilderness, establishing a foundation for entrepreneurship. The small farmers were often the backbone of the economy, supplying food and goods to the growing population, which enabled goods and services to circulate within the local economy (Harrison, 2015).

Small Business in 19th Century America

The 19th century saw the emergence of more diversified small agricultural enterprises, independent craftsmen, and small merchants. As urbanization progressed, these small businesses became critical to the burgeoning cities, often serving as hubs for trade and commerce. However, the advancements in technology also presented challenges, as small enterprises began to struggle with competition from larger manufacturers and changing consumer preferences (Bates, 2017). The growth of the railroad and telegraph systems allowed for greater market access, but it also emphasized the struggle for small businesses to secure operating capital.

Small Business in 20th Century America

The 20th century was marked by dramatic economic changes, especially with the rise of modern corporations. The challenges that small businesses faced intensified, particularly in their ability to raise sufficient funds and compete against larger companies. Many small enterprises found it difficult to operate efficiently, leading to a substantial consolidation of industries (Kauffman, 2018). Despite these difficulties, small businesses continued to contribute to job creation, offering more than three-fourths of the economy’s new jobs within this period (SBA, 2017).

Small Business in the Current American Economy

Today, small businesses represent a significant portion of the American economy, encompassing a wide diversity of enterprises from sole proprietorships to thriving corporations. According to the U.S. Small Business Administration (SBA), small businesses employ about 52% of the workforce, illustrating their pivotal role in job creation and economic health (SBA, 2017). This has contributed to the American ethos of opportunity where anyone with a good idea can pursue entrepreneurship.

Challenges Facing Small Businesses

Despite the opportunities that contemporary entrepreneurs face, small businesses still grapple with numerous challenges. Cash flow problems continue to be a prevalent issue, impacting about 82% of all small businesses (US Small Business Administration, 2017). Additionally, economic uncertainty, the cost of health insurance, and competition from large corporations can hinder growth and sustainability.

Support for Small Businesses

The U.S. government has initiated various support programs through the SBA to assist small businesses. From providing loans and financial education to facilitating networking opportunities, the SBA has been instrumental in fostering an environment conducive to entrepreneurship. Moreover, private investors, including angel investors and venture capitalists, have also become crucial to the growth of small businesses, especially in technology sectors (Morris & Jones, 2021).

Women and Minorities in Small Business

Women and minorities have made remarkable strides in small business ownership. As of 2019, approximately 40% of U.S. businesses were owned by women, and the empowerment of these groups continues to be a focus of governmental support programs (National Women’s Business Council, 2020). This shift not only diversifies the business landscape but also contributes to a more inclusive economy.

Conclusion

In conclusion, the historical perspective of small business in America illustrates a resilient and adaptive sector that has continually shaped the economic landscape. From humble beginnings in the 18th century to the modern-day challenges and opportunities, small businesses remain an essential element of the American Dream. Moving forward, enhancing support systems for small businesses, especially among underrepresented groups, will be vital for sustaining economic growth and innovation.

References

  • Bates, T. (2017). Entrepreneurship in America: The Flourishing of Small Business. Small Business Research Summary.

  • Harrison, J. (2015). The Economic Role of Small Businesses in Colonial America. Journal of Economic History.

  • Kauffman, H. (2018). Small Business Dynamics in the 20th Century. Business History Review.

  • Morris, M. & Jones, K. (2021). The Impact of Angel Investors on Small Business Growth. Journal of Business Venturing.

  • National Women’s Business Council. (2020). 2020 Annual Report: Women Entrepreneurs in America.

  • SBA. (2017). Small Business Profiles for the States and Territories. U.S. Small Business Administration.

  • U.S. Census Bureau. (2017). Business Dynamics Statistics (BDS). U.S. Department of Commerce.

  • U.S. Department of State. (2017). Small Businesses in International Trade. Trade Reports.

  • SBE Council. (2017). The Role of Small Businesses in Trade. Small Business & Entrepreneurship Council.

  • US Small Business Administration. (2017). Small Business Economic Indicators. Reports and Statistics.