Small-business owners are integral to the fabric of the U.S. economy, generating millions of jobs and providing identity to the communities they serve. By fostering entrepreneurship and innovation, small businesses keep local economies healthy and vibrant.
Despite these benefits, many small businesses often lack funding to sustain and expand their operations, relying on local investors to get the capital they need to grow. Investing in small businesses offers potential returns, diversification, and an opportunity to participate in the success of the American economy.
This handy guide explores how retail investors could bolster their portfolios by investing in local businesses.
Small business investing by the numbers
Over the past 25 years, small businesses have accounted for 66 percent of employment growth, according to the U.S. Small Business Administration.
A study by the 3/50 project, an advocacy group, shows that for every $100 a customer spends at an independent store, $68 returns to the community through taxes, payrolls, and other expenses. In comparison, when you spend $100 at a national chain, only $43 stays in the community.
There are 31.7 million small businesses in the U.S., accounting for 99.9 percent of all companies, according to the U.S. Chamber of Commerce.
Small businesses employ about half of America’s private sector workforce, according to Dataman Group.
A 2020 study by Union Bank revealed tha …