The Economic Impact Of Microbusinesses On The Local Economy

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Helping a few small (micro) businesses isn't going to help our local economy."

"Are small business assistance programs really worth the investment in such a small town?"

"Why do we need to help local home-based businesses?"

"Empty buildings aren't costing the community anything."

These are just a few of the comments and questions we've encountered from community leaders over the years here at SmartStart. Initially, I wanted to express how these remarks made us want to scream. But then I realized that we once thought similarly. Maybe you do too.

However, as we engaged with small businesses and rural communities firsthand and delved into the data, it became clear: microbusinesses are not just nice to have — they’re essential. They aren’t merely hobbies or side hustles; they are job creators, income generators, and community builders.

Microbusinesses Are The Backbone of the Local Economy

In small and rural towns, microbusinesses often represent the economy. They fill storefronts, keep money circulating locally, and provide the services residents depend on. Ignoring them means missing out on real economic growth and long-term community resilience. If you’re not investing in them, you’re leaving opportunities, jobs, and tax dollars on the table, which can drive residents away.

This might require a mindset shift—just like it did for us—but we have data to support this.

Microbusinesses Facts

Let’s dive into the data:

• Over 96% of all U.S. businesses are microbusinesses (sbe council), typically defined as having fewer than 10 employees.

• 82% of U.S. small businesses have no paid employees - just the owner.

• In 2020, there were 27.2 million one-person (nonemployer) businesses (census.gov) in the U.S.

• Between 1997 and 2021, rural solo businesses grew significantly, making up 76% of all rural businesses (choicesmagazine.org) by 2021.

  
  

So when someone opens a craft business from home, starts a mobile lawn care company, or begins selling baked goods at the farmers market, they’re not just “doing a little something on the side.” They’re building the economy.

Microbusinesses Create Jobs

Microbusinesses may be small, but they are powerful job creators. According to a 2024 analysis by GoDaddy’s Venture Forward and UCLA, each new microbusiness adds about 7 jobs in its community (up from just 2 jobs in 2018). Additionally, the SBA reports that small businesses have created 61% of all net new jobs since the mid-1990s.

Here's an interesting thought... If just 1 in 3 Main Street microbusinesses hired one person, we’d hit full employment in this country. (AEO) That’s the kind of ROI you don’t want to ignore!

Income + Tax Revenue = Community Wealth

Microbusinesses also:

• Increase local household incomes – higher microbusiness density equals higher median incomes (GoDaddy Venture Forward).

• Contribute over $135 billion in tax and fee revenue annually at local, state, and federal levels (AEO).

• Keep dollars local – money earned by microbusinesses tends to stay in the community.

  
  

These entrepreneurs fill empty storefronts, provide essential services, sponsor youth sports, and donate to local causes. Their value to the community often extends far beyond financial contributions.

Why Microbusinesses Need Support

But here’s the catch — microbusinesses aren’t easy to run. Due to their size, people often overlook the knowledge and support these business owners require. Just because they’re small doesn’t mean they don’t face significant challenges:

• Most microbusiness owners are bootstrapping with limited access to capital.

• Many microbusiness owners lack basic business knowledge or support.

• They often don’t qualify for programs designed for “small businesses” that are actually meant for medium-sized companies or businesses aiming to scale (like pitch competitions or accelerator programs).

  
  

These owners need guidance, mentorship, and an ecosystem that meets them where they are—whether they’re running a side hustle from their kitchen table or opening a Main Street shop.

What Can You Do To Support Microbusinesses?

Chances are, if you’re reading this, you’re in a position to help drive economic development in your community by supporting microbusinesses. Here’s how to get started:

• Acknowledge the economic impact of microbusinesses in your community.

• Map and track microbusiness activity in your community (SmartStart can help with that 😊).

• Invest in programs that support local microbusinesses (SmartStart can help with that, too 😉).

• Treat microbusinesses as essential infrastructure — because they are.

  
  

Let’s start treating them like the economic powerhouses they truly are! When a microbusiness succeeds, the entire community wins.