The Economic Impact Of Microbusinesses On The Local Economy

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

"Are small businesses 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."

Those are a few of the comments and questions we have heard from community leaders over the past few years here at SmartStart. At first, I wanted to share how those kinds of remarks make us want to scream, but then I realized that we thought those things at one time. Maybe you do to.

But the more we worked with small businesses and small communties first hand and dug into the data, the clearer it became: microbusinesses are not just nice to have — they’re essential. They’re not hobbies or side hustles that quietly exist in the background. They are job creators, income generators, and community builders.

Microbusinesses Are The Local Economy

In small and rural towns especially, microbusinesses often are the economy. They fill storefronts, keep money circulating locally, and offer the services residents rely 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 opportunity, jobs, and tax dollars on the table, and chasing residents out of town.

This might take a mindshift - like it did with us - but we have data to help.

Microbusinesses Facts

Let’s start with the data:

• Over 96% of all U.S. businesses are microbusinesses (sbe council), often defined as having fewer than 10 employees (and in many cases, just one!)

• 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 lawncare 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’re 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). And according to the SBA, 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 = higher median incomes (GoDaddy Venture Forward)

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

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

  
  

These entrepreneurs are the ones filling empty storefronts, offering needed services, sponsoring youth sports, and donating to local causes. Their value to the community often goes way beyond the money.

Why Microbusinesses Need Support

But here’s the thing — microbusinesses aren’t easy. Because of their size, people often dismiss the knowledge and support these business owners need. Just because they’re small doesn’t mean they don’t face big 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 medium-sized companies or businesses started to scale (pitch competitions, accelerator programs, etc.)

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 that if you are reading this, you’re in a position to help drive economic development in your commuity through helping microbusinesses succeed. Here’s how to start:

• Acknowlege 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’s system can help with that, too 😉)

• Treat microbusinesses as essential infrastructure — because they are

Let's start treating them like the economic powerhouses they are. When a microbusiness succeeds, the community wins.