Small biz powers America's engine

Though many Americans think of a Fortune 500 corporation when they think of the "typical" American business, this has never been -- and is even less true today than it was just 10 years ago. In fact, the business of America is done chiefly by small and medium-sized businesses -- called SMEs.

There are 21 million business enterprises in the U.S., according to a recent Inc. magazine review of the dynamics of small business in America. Of these, only 14,000 have more than 500 employees.

The rest are SMEs. Many SMEs are family-owned enterprises -- including partnerships, sole proprietorships, unincorporated home businesses and the like.

Though many of these companies are in the retail or personal service business, a large and increasing number are found higher on the value. Examples: Specialty manufacturing operations (e.g.. textiles, confectioneries, computer peripherals, luggage) and business and professional service firms -- e.g., writers, analysts, brokers. software producers, financial advisers, money managers and consultants (e.g., management, computers, software).

These SMEs -- particularly those under 100 employees -- are responsible for most of the net new job creation and for much of the new technology and innovation that fuel U.S. economic growth and competitiveness. That's why many call America a home- and family-based entrepreneurial economy.

In the U.S., the family-based entrepreneurial economy is growing stronger, not weaker. Examples:

• Small, locally owned and rapidly growing businesses continue to generate most new jobs and most new technology and to fuel the engine of innovation and economic growth.

The importance of home-based businesses -- what we call the small office, home office (SOHO) movement -- cannot be over-estimated. Many world-famous companies began as home-based businesses: Gillette, Steinway (pianos), Hallmark (greeting cards), Electronic Data Systems, Disney, Ford, Hewlett-Packard and other old stand-bys. They are a major source of new job creation and a major force in increasing U.S. productivity and enhancing U.S. economic competitiveness.

America's economy, which for 25 years after World War II featured large corporations, has become a new economy of entrepreneurs. This new economy and its leading-edge industries -- including telecommunications, computers, software, biotechnology, microelectronics, new materials, entertainment and others -- has placed the U.S. in a leadership position as we approach the new century.

That's why the strong position of the U.S. should not be underestimated as we approach a millennium that will reward those that are quick, flexible and innovative.