The small business sector of the United States is rapidly growing and creating more competition for large corporations nationwide.
According to the United States Small Business Administration 2016 report the number of small businesses has increased 49 percent since 1982. Employment has been eliminated from big business by 4 million jobs since 1990, while small businesses have added 8 million new jobs since the same year.
According to the SBA, there are 28.8 million small businesses in America which accounts for 54 percent of all United States sales. The 2016 report from the U.S. SBA states that the 600,000 plus franchised small businesses in the United States account for 40 percent of all retail sales and account for a whopping 66 percent of all net new jobs since the 1970’s.
Jake Freedman is the founder of Dovr Media where he works with small businesses around the nation that are trying to reach more customers online. Freedman explained how his work has some astounding rewards for both himself and the companies he is working with.
“The core end of my business now is doing 3-dimensional tours. I call myself a cyber agent, like a digital ninja. No one knows what they are doing when it comes to digital media, so my role is to be the millennial for hire, the person that sits there or works with a group, make it new for people and get yourself seen online. There is a million ways to do it, the way that I do it is just an easy and proven method so far,” Freedman said.
Small businesses compete on all levels, whether they are trying to be the first in a niche market or they are trying to make an appearance on the scene as a local company providing a service.
Damon Grace is the owner of a bubble soccer rental company out of Metro Detroit which got their start from a grant that came from Michigan State University. Grace said that being the first ones to tap in to a market in a given demographic has given them a leg up on the competition.
“Since we were the first bubble soccer rental company in Michigan, we were able to get are names out their first, and word of mouth helps us a ton (grassroots marketing). Our largest competitor is Knockerballs, which is a worldwide bubble soccer rental company, with hundreds of branches and millions of marketing dollars. We can compete with them still as we provide a more personal and fun relationship with customers. Also, SEO wise, we are top page on google due to being the first in Michigan audience,” Grace said.
As is the case with many small businesses, Grace said that the customer relationship that the company has is what is keeping them afloat today.
“We stay alive through strong customer relationships, working with them and being super flexible to their needs. We offer great prices too, offering a price match guarantee to any other company. We also provide great referees to help kids and adults learn how to play, and answer any questions they have,” Grace said.
Most small businesses get their start by receiving a loan which requires you to set up a plan to pay back the loan overtime. This is contingent upon whether your business becomes stable and could ultimately leave you without a business and a lot of debt.
Going through the stage of requesting and being approved for a loan is something that large corporations do not have to deal with as they are already established as a large corporation.
The SBA suggests that a SBA 7(a) loan is a great option for business owners who have stellar credit, it is also the most popular type of SBA loan.
According to statistics published by the SBA in March 2016, big banks approved 23 percent of funding requests, institutional lenders (savings banks, life insurance companies, etc.) approved 62.8 percent, while small banks approved 48.7 percent. Additionally, alternative lenders approved 60.7 percent of loan requests.
According to information provided by the SBA, the average SBA 7(a) loan size in 2015 was $371,628. To put this number into perspective, you are required to pay almost $12,500 in loan payments annually to pay that amount off over 30 years.
James Ajlouny owns multiple sites for mobile park homes in Michigan. Ajlouny said that he applied for a loan when he first started his business and is still paying off his original loan while making a profitable income off of his original investment.
“[We received] a loan from Bank of America and other lenders. He [his father] owes money on the parks because they are 30-year terms but is paying them off through time. The value has well surpassed what he bought the parks for in the 80’s and 90’s,” Ajlouny said.
Ajlouny emphasized the amount of money required to purchase property while also explaining the benefits that could come if you are running the business properly.
“Mobile home parks are expensive to buy and cost well over million dollars. [His father] got loans to purchase his first park and over time bought three more. It is definitely enough to keep our family and my grandpas to live comfortably. Between the four parks, he brings in about $2.5 million annually in revenue and roughly $300,000 in personal income,” Ajlouny said.
Obtaining financing is difficult for some small businesses though, 27% of businesses surveyed by the NSBA claimed that they were not able to receive the funding that they needed.
Once you have your loan and are getting your business off the ground, it is your job as an owner to make sure that the product or service that you are providing is high-quality and you are creating a customer base that is committed to using the products and/or services you are selling or the services that you are providing.
Jake Leider is the owner and founder of MeditationWorks which is located in metro-Detroit. Leider explained how making it affordable and competitive is the key to the success of their business.
“How do we keep it alive? I would say we have a customer base that wants this product. It is in high demand. We also have low prices compared to average and per above answer, provide extremely high quality services,” Leider said.
The struggle for many small businesses is not having the same amount of money and resources that the other large corporations have. Leider explained how it is up to the business owners themselves to make sure that their company stays afloat.
“We put our focus into delivering a high-quality product (meditation sessions) each and every visit. We don’t have much money and resources, but we do have time and energy, and we use that to give our customers the best possible experience we can,” Leider said.
Competing with the large corporations in the industry can come as a challenge to many small businesses. Tripp Damman works for his father, Warren Damman, their business is called Ameristeel, Inc., where they must make sure that they are providing their products to the correct market in order to stay competitive.
“Ameristeel, Inc. is alive because of the time and effort my father and my brothers put into the company. We are based around great customer service and quick turnaround times on all orders. Customer base is strong, [we have] been working with the same types of customers for a while. Because my family has been in the industry for over 30 years we have a very wide network of people we can do business with,” Tripp Damman said.
Overall, small businesses have a stable place in this country’s economy, whether it be by providing a great product or service or through top-notch customer service. Regardless of the business, large or small, quality speaks volumes.