What Does it Take to Create the First Job in a Small Business?

By Marina DeWit, Region 9 Advocate

According to the 2019 Small Business Profile data released by the Office of Advocacy, there are 30.7 million small businesses in the United States that employ 59.9 million people, which makes up 47.3 percent of the private workforce.  With the economy on the rise and 1.8 million net new jobs created by small businesses in the latest year of data, it made me wonder, what does it take to create a job?

After raising the question with the owners of various companies, there were similar stories of job creation. Businesses start with an idea. Whether it’s a married couple, long-time friends, or someone with a hobby, the thought of working for oneself and earning a living by doing what one loves is highly appealing. The potential for success and the dream of “making it big” drives many who start a small business.

Once the idea becomes actionable, the couple, the friends, or the individual needs startup capital.  They dip into their savings, mortgage their house, or get a business loan to start building their company. Then, they often work 70 to 80 hours or more a week building, creating, organizing, structuring, advertising, connecting, rewriting, networking, and more. They spend sleepless nights worrying if they will succeed and weekends catching up, while trying to manage work, family, and conserving every expense to ensure as much capital remains in the business as possible.

If the company is part of the 78 percent of startups that has made it through the first year, the owners can become quite tired of navigating these obstacles. That’s when they can potentially decide to hire help, thus create a job. That help often comes from family members, friends, neighbors, or others they personally know.

Now crossing the threshold from self-employed to employers of others, the small business owners spend considerable time and money trying to understand and comply with the tax codes, legislative acts, health care, state and local codes, and deal with the accounting. Suddenly, the owners don’t have much time to actually do the job that was once an exciting idea. As the company grows and creates income, it is often forgotten by the customers, clients, and consumers that the earnings are commonly going towards paying off the loans that started the company in the first place, and depending on their size, it may take a while.

Creating a job in a small business takes time, hard work, and multiple sacrifices. It is important for the company to have a growth period to reach the level of being able to financially support an employee. About half of the establishments survive five or more years and only one-third last more than ten years.

At the end of the day, most of the small business owners will say that they are thankful for their business network and support from other small businesses and organizations. They wish people could understand and appreciate how hard they work. They want to be good role models for their children and teach them self-reliance and determination, as well as inspire them to pursue their own dreams. They hope to earn respect through honesty and dedication as they grow their businesses. When added together, the small companies formed from those original ideas are the backbone of the American economy and need the most help in reducing the burdens they face in creating jobs and becoming successful.

Marina DeWit serves as the Region 9 Advocate for the SBA Office of Advocacy, representing small businesses in Arizona, California, Nevada, Hawaii, and the Pacific Islands of Guam, American Samoa, Commonwealth of the Northern Mariana Islands, and Trust Territories. DeWit works with small business owners, state and local governments, and small business associations to bring the voice of Region 9 to Washington DC. She can be reached at Marina.DeWit@sba.gov.