SBI (Small Business Insights)
In the world of small businesses, size is often measured not just by the money they make but also by the number of employees they have across various locations.
This aligns with the U.S. Small Business Administration’s (SBA) definition, which uses a Table of Size Standards that varies based on industry, revenue, and employment.
According to SBA’s criteria, a roofing contractor qualifies as a small business with annual revenues of $16.5 million or less, while an Asphalt Shingle and Coating Material manufacturer falls into the small business category with fewer than 750 employees.
These definitions shed light on how individual businesses within larger companies can be more resilient to economic shocks. For instance, in 2017, the United States had 37,513 Limited-Service Restaurants with fewer than five employees, making up 23.7% of the industry’s firms but only contributing 4.0% ($10.2 billion) to the total sales.
For those seeking to define ‘small’ based on capturing 50% of industry revenue, firms with fewer than 250 employees might be a suitable threshold. In 2017, such businesses accounted for 51.7% ($131.1 billion) of the total revenue of $253.3 billion.
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Turning to Nigeria, Small and Medium Enterprises (SMEs) hold a significant role, contributing 48% to the national GDP and accounting for 96% of businesses and 84% of employment. In January 2023, the country had 31.60 million social media users, offering SMEs a powerful tool to connect with their audience.
However, despite their importance, over 50% of SMEs in Nigeria fail within their first year, and more than 95% do not survive beyond five years.
The main challenges they face include a lack of market demand, difficulties in obtaining finance, finding customers, and infrastructure deficits.
High operational costs, particularly for electricity and rent, add to their struggles, as do the complexities of complying with local government levies.
Globally, small businesses are the backbone of many economies, constituting 90% of all companies and contributing to 50% of jobs. With a growing global workforce, SME development has become a priority for governments worldwide.
In the age of social media, it’s no surprise that connecting with the audience through these platforms is one of the most effective strategies. In 2021, over 4.26 billion people used social media worldwide, a number projected to reach nearly six billion by 2027. In addition, there are approximately 400 million small businesses worldwide.
While the statistics paint a diverse picture of small businesses, their resilience, challenges, and contributions to economies are undeniable. With the right support and access to resources, these enterprises can achieve their potential and play a pivotal role in wealth generation, job creation, innovation, and poverty alleviation.”
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