The US Small Business Administration (SBA), and other small business advocates (including EntreWorks Consulting!), can regularly regale you with tons of data and statistics on the power and impact of small business for the US economy. Now, we can tap into similar data for the global economy thanks to a new data report from the International Labor Organization (ILO), which has not normally focused on the small business-related issues. In this study, ILO researchers tracked employment surveys from 99 countries over a period between 2009 and 2018. (Note: the data set does not include the US and North America). The study looked at business in various size classes, but all had less than fifty employees. This is one of the first studies that accounts for the global impact of the self-employed and the informal sector (i.e. unlicensed businesses). These activities may account for anywhere from five percent of the economy in developed regions to more than 90 percent of the local economy in some countries. Among the 99 studies countries, the informal sector accounted for an average of 64 percent of total economic activity.
The ILO team found that global small business is indeed a big business. Globally, they find that 70 percent of total global employment is concentrated in small economic units. They also found that, in low income countries, 54 percent of global workers are self-employed. The self-employed account for 11 percent of employment in higher-income countries. Meanwhile, the share of workers employed in small businesses (with 10-49 employees) ranges from 3% in low income countries to 25% in higher income countries.
There are countless implications related to this data, and many are well addressed in the report’s conclusions. My one take-away is that we need to pay more attention to small business’ impact on a global scale—not simply in terms of helping people start new companies, but also in understanding and improving the work environment and career potential for the millions of people who work in small businesses every day. We know a lot about management structures and work practices in large organizations; we need similar knowledge about what happens and what improves performance in smaller business units as well.