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The Strength of Small Business Associations

By: Cary Sheih

Date: May, 07 2019

The Strength of Small Business Associations

By Cary Sheih


When I relocated to Glenwood Springs, Colorado, after living and working abroad for eight years—most recently, Cambodia—I found myself feeling unprepared (grossly under prepared would be more accurate) for the change. Armed with my new role at Community Builders, I felt energized for the fresh challenge, but quickly realized that I was reentering a very different America than what I thought I knew.

During the time that I lived abroad, the U.S. economy had bounced back from the depths of the Great Recession, and by May 2019 had marked 36 consecutive quarters of positive GDP growth that began in the fourth quarter of 2009. (Speaking of quarters, I also noticed the new images on quarters, including the Great Sand Dune of the state I now call home.) Instead of financial bailouts, the housing crash and unemployment, we were now discussing incremental infill, entrepreneurship, affordable housing and equality. To bridge the gap during my time away, I found myself trying to make connections with my experience of working in Cambodia.

For starters, the U.S. and Cambodian economy couldn’t be more different—from the sheer difference in size of their GDP’s to economic makeup to household income to… you name it. Just to give an example, the median household income in 2019 in the U.S. of $56,500 is approximately 37X that of Cambodia. But one similarity was the underlying importance of small businesses and the role that they play in both countries, or in any country for that matter. After some initial research, I quickly discovered that the sheer size, scale, and economic influence of small businesses at all levels, whether global, national or state, doesn’t generate enough attention despite the economic development opportunities they foster. The entrepreneurial nature of taking risks, fostering innovation, improving management and in­creasing productivity is inherent to small businesses anywhere.

Let’s look at some numbers. In 2018, an estimated 30 million small businesses made up almost half—or approximately 48% of the U.S. workforce—accounting for approximately 60 million workers. In Colorado alone, there are approximately 610,000 small businesses employing over 1.1 million people, or 48% of the total workforce – similar to the U.S. national average. (For comparison, it is estimated that Cambodia has about 500,000 small and medium enterprises, or SME’s.) In other nearby mountain states, such as Montana and Wyoming, the number of workers employed in small businesses surpasses 60%.
 

Source: U.S. Small Business Administration


But for all the sweat and hard work that owners of small businesses put in, it’s unfortunate that in some areas, including rural small towns (and in Cambodia, of course) where strength in numbers is even more important, the small business community continues to be disconnected from one another. Enter the role of Small Business Associations (or SBA’s).


Small Business Associations

Educating the public about the important role that small businesses play is ever more important considering their outsized influence in today’s economy. In many places (including, Cambodia), while joining a local chamber of commerce may be one way for businesses to connect, membership fees might be out of the reach for some startup businesses and owners, and therefore a conversational non-starter.  In addition, chambers tend to be on the larger side, and therefore may distract from the more specific issues that smaller business associations can focus on. The same disadvantage might apply to creating a business improvement district (or BID for short) which relies on taxation to provide services and projects within a boundary.

One practical alternative is the creation of small grassroots business associations. Small business associations may be formed around any number of affiliations such as businesses that are located along a certain corridor, minority-owned businesses or an industry-specific trade such as restaurants, or as in the case of Cambodia, garment workers. These groups help organize and unite small business communities’ opinions and ambitions, so they can be clearly and effectively communicated to the government while simultaneously informing and educating the public about the important role that small businesses play in our towns and cities.

A good, basic summary that lays out the steps to forming a small business association can be found here.

In rural small towns, the role that small business associations play may be even more profound as businesses along a certain corridor may be physically located adjacent to one another but still more than “a stone’s throw away” (this is especially true in Cambodia). Thus, the shared affiliations between businesses on a rural street may not be as obvious to the owner’s eyes as businesses that might be located along a city street.

In the case of Salida, CO, (where Community Builders is currently providing technical assistance for improvements along Highway 50), the owners of businesses adjacent to the corridor are currently exploring the possibility of creating a grassroots group. While still in the early stages of the process, the group’s representatives initially conducted research on the existing clubs and organizations in Salida, and discovered that there wasn’t a shortage of organizations in Salida; however, there wasn’t one that represented their voices.  After some preliminary analysis, they saw an opportunity to create a Highway 50 corridor small business association that could effectively communicate their concerns to government as the community moves forward with improvements along the corridor.
 

Discussions surrounding the creation of a small business association for businesses located along Highway 50 in Salida came out of the highway improvement technical assistance that Community Builders facilitated.

This goes to show that the connections and impacts that are made possible by small business associations go a long way towards achieving inclusiveness, entrepreneurship, increased economic development opportunities and improved access to business loans and training—qualities that are beneficial to every small business.

Main photo by Dan Smedley on Unsplash

AUTHOR

By: Cary Sheih

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