Economic Development Reference Guide

Small Business Development

America's 25 million small businesses employ more than 50 percent of the private work force, generate more than half of the nation's gross domestic product, and are the principal sources of new jobs in the U.S. economy. The importance of small businesses has led to improvements in the environment within which small businesses operate, with a proactive approach used to assist small business owners.

Since the U.S. Small Business Administrations's definition of small business is any business with fewer than 500 employees, small businesses vary widely in size and character. Many small businesses distinguish themselves by being innovative, flexible, and strongly tied to the community. Small businesses often require economic development finance tools and programs to grow and develop new products. Venture capital can be important for small businesses with high growth potential.

Trends in Small Business Development

• Community Development Block Grants and tax increment financing are used as a source of funding for local entrepreneurs and small businesses usually on condition that the money will contribute to increasing the size of the business workforce.

• Business incubators foster start-up companies their first few years, a time in which most small businesses die. Small business incubators provide office space, administrative assistance, funding information such as links to venture capital and proactive entrepreneurial mentoring.

• Technology and biotech incubators are in high demand by startup firms because they offer mentoring affordable office space, technology infrastructure and laboratory costs and thus allow the firm to concentrate business and product development.

• Business improvement districts fund activities and improvements, such as streetscaping and stronger law enforcement, which benefit small retail businesses in commercial areas.

• Informal and formal networking helps small businesses learn from each other about how to reach new customers, suppliers and potential workers.

• Small e-commerce businesses ranging from Web design to online retailers allow entrepreneurs to sell goods and services all day long, all around the world, with minimal investment in bricks-and-mortar storefronts.

• Small businesses rooted in technology may employ fewer than 10 people and yet have budgets in the millions.

• Fee-based small business buyer's consortia make members eligible for bulk discounts on raw materials, such as food products and metals or other inputs like broadband service.

Web-based Resources for Small Business Development

• Business Nation
• Certified Development Company (504) Loan Program
• Minority Business Development Agency
• U.S. Department of Commerce
• U.S. Small Business Administration
• U.S. Small Business Administration Loan Programs

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• Economic Development Strategic Planning
August 5-6 | San Francisco, CA

• Technology-led Economic Development
August 26-27 | Lansing, MI

• Workforce Development
September 23-24 | Columbus, OH

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