Small-Scale Entrepreneurs Are More Important To The Economy Than One Might Think

Everyone has seen or known someone who is running a business through online commerce. Maybe you’ve shopped at their online store or browsed through their Instagram account. There are millions of small, digitally enabled side hustles being run across the country. But did you know that these small-scale entrepreneurs generate significant spillover benefits to their communities?

According to data found from 20 million websites, countries that have thriving small-scale ventures experience stronger recoveries from recessions and economic disasters. An economic development expert from the Brookings Institution, Marcela Escobari, says “these small web businesses can be an important buffer for individuals and local communities facing economic challenges.”

A new analysis is being conducted on small online businesses through partners Arizona State University, University of Iowa and GoDaddy. An article by the New York Times says that, “The data set from GoDaddy includes information on its customers combined with third-party data and surveys, all stripped of personally identifying information. While the analysis predates the coronavirus outbreak, the regularly refreshed data should help track how a little-studied sector of the economy weathers the downturn. Its intent, GoDaddy said, is that researchers and lawmakers will use the data to inform public policy to nurture small web-enabled entrepreneurs.”

Through this data analysis, the partnership found that “each highly active small business venture per 100 people added $331 to the growth in the median household income in a country over a two-year period. The effect, the researchers said, holds up even after stripping out factors like household income, education level, ethnicity, geography and the local mix of industries.”

This data may offer a new perspective on where technology’s place is in economic development. Instead of trying to entice large tech companies with tax breaks to make investments, it may be more beneficial for most communities to generate programs aimed at helping small-scale ventures and skills development.

The New York Times article says that “Most small online ventures, according to the GoDaddy data, remain side hustles. About one-fifth of the entrepreneurs surveyed said their web businesses were their main source of income. But more than half said their web ventures generated some household income.” It’s businesses like these that need to be protected during this time and make a bigger contribution to the economy than one might think.

Read the full article from the New York Times.