Small businesses are vital to the U.S. economy. Micro, small, and medium enterprises (up to 500 employees) generate 58% of jobs and 39% of the “value-added” economy, the portion beyond the cost of production. That’s according to an October 2024 report by McKinsey Global Institute titled “America’s small businesses: Time to think big.”
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Micro, small, and medium enterprises (MSMEs) significantly influence certain U.S. industries. For instance, in the construction industry, MSMEs employ over 75% of the workforce and contribute more than 75% of the value added. Additionally, MSMEs represent more than half of the employment and value-added in professional services and accommodation and food services.
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Per the McKinsey report, since 2000 a substantial share of publicly traded companies with a market capitalization of $10 billion or more began as MSMEs. Small technology firms have achieved some of the most notable successes, with nearly a quarter of large public tech companies having originated as MSMEs over the last 25 years. Likewise, many of today’s major manufacturing firms trace their roots to small factories.
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McKinsey computed the opportunities for productivity improvements among U.S. businesses compared to other advanced economies and then allocated the opportunities by industry sector. Retail and wholesale trade, manufacturing, construction, and technology represented the top opportunities owing to their impact on the overall economy.