Small business contribution
By: J. David Chapman/December 5, 2019
We recently celebrated two of my favorite days. The first is a national holiday giving us an opportunity to give thanks – fittingly named Thanksgiving. My second favorite day is always celebrated on the Saturday after Thanksgiving – Small Business Day.
National Small Business Day celebrates small business and honors small business owners. It was designated by the Small Business Administration and occurs the same time of year that National Small Business Week takes place. During National Small Business Week, each state’s Small Business Administration office identifies a business owner to be recognized in Washington, D.C. Julie and I were chosen to represent Oklahoma for this award in 1997 and spent a week at the country’s capital culminating in an award dinner at the White House.
About 6.5 million new businesses are started in the U.S. each year, and about three-fifths of new jobs in the country come from small businesses. The one-year survival rate for small businesses runs about 80%. About half of businesses make it five years or longer, and about a third last 10 years or more.
About half of small businesses are home-based, and about one out of every five firms in the U.S. are family-owned. The three largest small business sectors are real estate, rental, and leasing industry; wholesale and retail trade; and the manufacturing and mining sector. The home-based businesses represent a huge opportunity for building owners willing to grow with these entrepreneurs. There is an encouraging trend in retail supporting these small businesses.
Some developers are focusing on high-density real estate in the walkable, urban core where these small-business entrepreneurs are beginning to creatively use small spaces we call micro-retail. These micro-retail spaces can be a win-win proposition for property owners and business owners. In high-rent areas, small spaces cut down on overhead for retailers while providing rent revenue for property owners with small or odd spaces they hadn’t considered viable.
The key to both property owners and businesses in a micro retail environment is tenant mix, where the businesses complement each other. Owners may want to consider offering shorter leases, and may not be able to require extensive credit. Investors will always like the security that comes with a national-credit tenant, but I would encourage them to take a chance on small business entrepreneurs.
J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).