Made in America: The New World, The Old and the Industrial Revolution

Small Business is the Backbone of the United States Economy

The Old World Economy

In the Old World, commercial activities relied on local trade and barter systems, primarily rooted in agricultural economies. The limits imposed by geographic boundaries often made long-distance trade a perilous venture due to poor transportation infrastructure and a lack of standardized currencies. Nevertheless, this period laid the groundwork for the principles of trade and commerce that would evolve into more sophisticated systems.

 – Let your conversation be without covetousness; and be content with such things as ye have: for he hath said, I will never leave thee, nor forsake thee.

The emergence of mercantilism during the 16th and 17th centuries represented a major evolution in business practices. Nations sought to increase wealth through a favorable trade balance, favoring exports over imports. This epoch led to the establishment of colonial empires, enhancing the exchange of goods such as spices, textiles, and precious metals. However, mercantilism had its drawbacks, frequently resulting in monopolistic practices that diminished competition as governments awarded exclusive rights to certain companies.

Despite these limitations, the Old World fostered early innovations in finance and trade that propelled future economic progress. The formation of joint-stock companies, exemplified by the British East India Company, introduced capital pooling and risk-sharing among investors, paving the way for contemporary corporate frameworks.

The phrase “Old World economy” describes the economic frameworks and trade systems that existed in Europe, Asia, and Africa before the noteworthy interactions with the Americas, referred to as the “New World.” This era showcased a diverse array of economic practices that included agriculture, commerce, manufacturing, and the exchange of goods and services across different regions.

In relation to the British Industrial Revolution, the Old World economy encapsulated territories in Europe as well as parts of Asia and Africa. The research titled “Made in America? The New World, the Old, and the Industrial Revolution” by Gregory Clark, Kevin H. O’Rourke, and Alan M. Taylor investigates the pivotal role of trade with both the New World—primarily North America—and other global regions during this transformative period.

While colonies were not the primary drivers of the Industrial Revolution, a narrow focus on supply-side growth proved insufficient. Trade was vital for Britain’s industrial progress, significantly with a global context rather than exclusively with its American colonies. By the mid-1850s, Britain’s economy increasingly relied on international trade as a key factor for its ongoing expansion and success.

For many years, explanations of the British Industrial Revolution centered predominantly on technological advances and supply-side dynamics, with little consideration given to demand or international trade. However, new theories emphasize the impact of trade with the New World and an enhanced influx of raw cotton. This research employs general equilibrium models to evaluate both perspectives.

 – For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

A hypothetical trade cessation with North America would have limited consequences for England. Conversely, a suspension of trade with the Rest of the World would have resulted in substantial repercussions, potentially increasing cotton textile production by one-third. A complete halt in trade would have led to a slight decrease in overall welfare and significant shifts in distribution.

The New World Economy

The New World economy significantly contributed to global economic progress by supplying crucial raw materials and becoming part of worldwide trade networks. For Britain during the Industrial Revolution, the synergistic effects of trade with both the New World and the Old World were instrumental in fostering industrial expansion and specialization.

Trade relationships with Europe heavily shaped the New World economy, with exports of essential raw materials such as cotton, tobacco, and sugar, along with valuable minerals like gold and silver, playing a vital role in forming the economic backdrop. These exports were critical to meeting the resource demands of European industries, especially the British textile sector, which relied extensively on raw cotton from the Americas.

The Power of the Industrial Revolution

The Industrial Revolution, which took place from the late 18th to the early 19th centuries, marked a turning point in the history of business. This period highlighted a transition from agrarian economies to industrialized manufacturing, propelled by technological innovations such as the steam engine, mechanized looms, and coal power. Centralized production in factories arose, significantly enhancing output.

One of the most profound consequences of the Industrial Revolution was the transformation of labor. The growing demand for factory workers triggered rapid urbanization, as individuals moved from rural areas to cities for employment. This demographic shift brought about new social dynamics as workers began organizing for improved wages and working conditions.

 – No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.

Additionally, this era revolutionized transportation and communication with advancements like railways and telegraphs. Such innovations facilitated the movement of goods and information, contracting distances and streamlining long-distance trade. The idea of economies of scale became paramount as businesses sought to enhance efficiency and lower costs through mass production.

Nonetheless, this time of progress was not without its challenges. The swift pace of industrialization often resulted in environmental harms and dire working conditions, underscoring the necessity for regulatory frameworks to protect workers and the environment. Despite the hardships, the Industrial Revolution set the foundation for modern capitalism, introducing concepts of consumerism and competitive markets.

The true strength of the Industrial Revolution originated from a combination of technological progress, military prowess, and extensive global trade networks. This era of transformation not only altered economies but also reshaped societies and technologies. The following factors were crucial to the Revolution’s power:

1. Technological Progress:
– At the heart of the Industrial Revolution were groundbreaking technological innovations. Advancements in cotton production, iron and steel manufacturing, and transportation emerged, primarily in Britain, enhancing productivity and fostering significant economic growth.

2. Military and Trade Integration:
– The Industrial Revolution coincided with Britain’s military achievements, particularly against France, allowing for dominance over global trade routes. This military edge facilitated access to raw materials and global markets, which further stimulated industrial progress.

3. Expansion of Trade Networks:
– Global trade proved to be essential. Although trade with the New World furnished vital resources like cotton, broader trade frameworks had a more profound effect on Britain’s industrial development. The ability to both export finished products and procure raw materials from various regions supported economic specialization and expansion.

4. Economic Models and Analyses:
– Studies utilizing calibrated general equilibrium models indicate that while New World trade supported industrialization, the impact of global trade was far more substantial. If North American trade ceased, Britain’s cotton textile output would decline by 8%; however, stopping trade with the rest of the world would provoke a far more damaging effect.

 – He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity.

5. Economic Growth Drivers:
– The Industrial Revolution brought about dramatic increases in both productivity and income levels. From the 1760s to the 1850s, the average income in Britain surged by 45%, fueled by technological innovations and expanded trade relationships.

Business Transformations: The Journey from the Old World to the Industrial Revolution and Global Interconnectedness

The landscape of business practices has undergone remarkable changes over the centuries, reshaping economic systems and societal structures. From the trade practices of the Old World to the mechanical advancements of the Industrial Revolution and the interconnected global economy we know today, these transitions have redefined business operations and commerce. This essay explores these significant shifts, illustrating how each era’s distinct features have molded today’s global business environment while incorporating essential elements of innovation, trade, and globalization.

The New World of Globalism: Connected Economies

The rise of globalization in the late 20th and early 21st centuries has further reshaped business landscapes, resulting in a world interconnected by integrated economies and transnational corporations. Globalization, driven by technological advancements—especially in information and communication—has facilitated the quick exchange of ideas, goods, and services across borders.

Among the hallmarks of the modern global economy is the prevalence of multinational corporations (MNCs) that operate across multiple nations, often possessing supply chains that span the globe. These enterprises harness globalization to explore new markets, cut production costs, and bolster their competitive position. The global supply chain model enables businesses to source materials and labor from diverse regions, enhancing efficiency and profitability.

Trade liberalization has also played a critical role in shaping the current global landscape. International agreements such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) have lowered trade barriers, facilitating the exchange of goods and services. This increase in competition has spurred innovation and broadened consumer choices.

However, globalization has sparked concerns regarding economic disparity and cultural homogenization. The benefits of globalization have not been equally shared, with some areas experiencing job losses and economic instability. Furthermore, the dominance of Western cultural products in the global market has ignited discussions around cultural imperialism and the erosion of local customs.

The journey from the Old World to the Industrial Revolution and into the interconnected global economy highlights the dynamic evolution of business. Each era has added unique elements to the global economic framework, from the foundational trade and finance principles of the Old World to the technological advancements and mass production of the Industrial Revolution, culminating in today’s interconnected economies and the prevalence of multinational corporations.

Matthew 6:19-21 – Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal:   

As we navigate the complexities of the modern global economy, it is crucial to derive lessons from historical developments to tackle present-day challenges. Emphasizing sustainable business practices, equitable economic development, and cultural diversity will be essential. By comprehending the historical context of business evolution, we can anticipate future trends and nurture a more inclusive and resilient global economy.

In the current economic climate, the rise of individuals launching their own small businesses is increasingly notable. This detailed compilation of small business statistics provides vital insights into this growing sector.

Our study aspires to portray a clear picture of small businesses, presenting critical statistics that reflect the current state of the industry in the U.S. as well as globally. We will delve into success and failure rates, demographic profiles of small business owners, and additional relevant information.

Are you ready to uncover the substantial significance of small businesses? Let’s explore the data.

Key Small Business Statistics for 2024

– In the United States, there are approximately 33.3 million small businesses.
– Small businesses are responsible for creating 64% of new jobs annually, translating to 1.5 million new jobs each year in the U.S.
– 99.9% of all U.S. businesses are categorized as small businesses, defined as those with fewer than 250 employees.
– 60% of entrepreneurs initiate their ventures to attain independence as their own bosses.
– 50% of small businesses do not survive past their first five years.
– More than 65% of small businesses turn a profit.
– 64% of startups began with an initial investment of under $10,000.
– Globally, small businesses represent 90% of all enterprises and comprise 50% of total employment.
– Approximately 400 million small businesses operate worldwide.

Defining a Small Business

According to the U.S. Census Bureau, most small businesses in the U.S. employ fewer than five workers. However, definitions can vary based on employee count or annual revenue, depending on the specific industry. Revenue thresholds can range from $1 million to $40 million, and employee counts may vary from 100 to over 1,500, as defined by the U.S. Small Business Administration (SBA).

The SBA’s guidelines provide industry-specific definitions for small businesses. For instance, soybean farmers may generate up to $2 million in annual revenue, while retail bakeries must have fewer than 500 employees to fit the small business designation.

Globally, small businesses are typically recognized as those with fewer than 250 employees. Regardless of size, these businesses are vital to the global economy and essential drivers of growth within the U.S. economy. Operating a small business can be demanding, yet it also brings distinct advantages.

Benefits of Being a Small Business

The definitions of small business significantly influence the federal assistance available. Key advantages for small businesses include:

– Access to Small Business Loans: The SBA has the capacity to co-sign loans for small enterprises, and many banks may offer favorable lending conditions.
– Government Contracting Opportunities: Federal contracts grant small businesses a chance to compete with larger firms.
– Grant Access: Numerous grants are available to support small businesses in research and innovation, often not requiring repayment.
– Flexibility: Due to their size, small businesses often can swiftly adapt to meet customer demands.
– Customer Loyalty: Consumers tend to favor small businesses, which can provide more personalized services than larger corporations.
– Owner Contentment: Many small business owners report high levels of job satisfaction.

Luke 12:33-34 – Sell that ye have, and give alms; provide yourselves bags which wax not old, a treasure in the heavens that faileth not, where no thief approacheth, neither moth corrupteth.   

With a deeper understanding of small businesses and their particular characteristics, we can now delve into the detailed statistics.

Small Business Statistics

1. Total Number of Small Businesses in the U.S.: In the U.S., there are approximately 33.3 million small businesses (SBA 2023 Small Business Profile).

2. Proportion of Small Businesses in the U.S.: Small businesses represent 99.9% of U.S. enterprises, with 98% having fewer than 100 employees and 89% employing fewer than 20 individuals. Together, these businesses employ over 61.2 million Americans, accounting for 46.8% of the workforce.

3. Growth Trends in Small Businesses: The quantity of small businesses in the U.S. has doubled since 1982, with these companies occupying 30-50% of all commercial real estate.

4. Economic Influence: Small businesses contribute to 44% of U.S. economic activity (GDP), underscoring their importance for innovation, job generation, and economic growth.

5. Job Creation Impact: Two-thirds of all jobs created in the U.S. over the last 25 years have originated from small businesses.

6. Profitability Insights: Currently, over 65% of small businesses report profitability, showing a significant increase from just 40% in 2018.

7. Revenue Generation: 9% of small businesses generate over $1 million in revenue annually.

8. Future Prospects Outlook: 80% of small business owners express optimism about their business future.

9. Industry-specific Success Rates: The healthcare and social assistance sectors exhibit the highest survival rates for small businesses.

10. Business Viability: 62% of small business owners indicate their enterprises are in “good health.”

Failure Rates of Small Businesses

11. First-Year Failure Statistics: 20% of small businesses close within their initial year of operation.

12. Five-Year Failure Statistics: More than 50% of small businesses fail within five years.

13. Cash Flow Challenges: A staggering 82% of small businesses attribute their failure to cash flow difficulties.

14. Market Demand Issues: 42% of small businesses fail due to insufficient market demand.

15. Team-Related Challenges: 23% of businesses close because they do not have the right team in place.

Revenue Statistics for Small Businesses

18. Annual Sales Estimates: 27% of small businesses projected their 2020 annual sales would exceed $200,000.

19. Revenue for Non-Employer Businesses: These businesses averaged $46,978 in annual sales.

20. Owner Income: Over 86% of small business owners earn less than $100,000 each year.

21. Startup Capital Insights: 64% of new businesses begin with $10,000 or less in starting funds.

22. Concerns Regarding Cash: 65% of entrepreneurs express worries about having enough cash to launch their businesses.

23. Low Initial Capital Startups: A significant one-third of successful small businesses commenced with less than $5,000.

1 Timothy 6:17-19 – Charge them that are rich in this world, that they be not highminded, nor trust in uncertain riches, but in the living God, who giveth us richly all things to enjoy;   

24. Reliance on Social Media: 41% of local businesses depend on social media for revenue.

Statistics on Small Businesses in the U.S.

25. Job Creation Contribution: Small businesses are responsible for 64% of new net job creation each year in the U.S.

26. Family Ownership Facts: Approximately one in three small businesses are family-operated.

27. Minority Ownership Statistics: 17.7% of U.S. small businesses are minority-owned.

28. Women Ownership Data: Women manage 41% of all non-employer small businesses in the U.S.

29. Political Identification Trends: 40.6% of small business owners in America identify as Republicans.

30. Self-Employment Statistics: More than 15 million Americans work full-time for their own businesses.

31. Work Hours Trends: 19% of small business owners exceed 60 hours of work per week.

32. Motivations for Entrepreneurship: The primary motivation for 60% of entrepreneurs is to achieve independence in being their own boss.

33. Demographics of Self-Employment: 16.3% of self-employed individuals are over the age of 65.

Global Small Business Insights

34. Global Business Composition: Small businesses constitute around 90% of companies worldwide.

35. Global Count of Small Businesses: There are roughly 400 million small businesses on a global scale.

36. Job Creation Projections: By 2030, there will be a need for 600 million new jobs to accommodate the growing global workforce.

37. Financing Obstacles: Small and medium enterprises (SMEs) frequently find it challenging to secure bank loans compared to larger firms.

38. Costs of Digitalization: 56% of small business owners find the costs of digitalization prohibitively high.

39. Impact of COVID-19: Between 70% and 80% of SMEs worldwide reported revenue declines ranging from 30% to 50% due to the pandemic.

General Small Business Data

40. Online Presence Importance: 92% of small business owners believe a website serves as the most effective digital marketing tool.

41. Marketing Focus: 31% of business owners rank sales as their top marketing objective.

42. Marketing Management: 47% of small business owners independently handle their marketing efforts.

43. Home-Based Operations: Half of all small businesses are operated from home.

44. Consumer Support for Small Businesses: 91% of consumers state they prefer to patronize small businesses when it is practical.

45. Data Breach Vulnerability: 28% of data breaches affect small businesses.

 – Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase.

46. Investment in Technology: 65% of small business owners are inclined to invest in technologies such as artificial intelligence (AI).

47. Owner Satisfaction Rates: 39% of small business owners describe themselves as “very happy.”

48. Entrepreneurial Contentment: 92% of small business owners express no regrets about establishing their businesses.

Frequently Asked Questions (FAQ)

What percentage of businesses are classified as small?

Globally, small businesses make up approximately 90% of all enterprises and provide for 50% of total employment. In the U.S., they represent 99.9% of businesses, with 98% employing fewer than 100 individuals and 89% having fewer than 20 employees, supporting 61.2 million jobs.

What percentage of small businesses turn a profit?

Currently, the profitability rate for small businesses stands at 65%, a notable improvement from 40% noted in 2018.

Matthew 6:31-33 – Therefore take no thought, saying, What shall we eat? or, What shall we drink? or, Wherewithal shall we be clothed?