The Rise of Small Businesses in the United States: A Comprehensive Analysis

Since President Donald Trump took office in 2017, the small business landscape in the United States has experienced notable shifts. Amid sweeping policy changes and evolving economic dynamics, small business creation has accelerated at an impressive pace. From local boutiques to online startups, entrepreneurs have increasingly seized opportunities to enter the market. This article offers a detailed exploration of small business growth during and after Trump's presidency, highlighting underlying trends, policy drivers, and projected future developments. It analyzes how tax reforms, deregulation, trade policies, and broader economic factors contributed to this rise, while also examining sector-specific case studies and the challenges that remain. Through this analysis, we gain a better understanding of why small businesses have become an even more vital component of the U.S. economy and how they are poised to evolve moving forward.

Growth Trends in Small Businesses (2017–2024)

Between 2017 and 2024, the number of small businesses in the United States increased markedly. In 2017, there were approximately 29.6 million small businesses operating across the country. By 2024, this number had grown to about 34.8 million—an increase of more than 5 million businesses, or roughly 17.6%. This consistent upward trend is significant because it reflects more than just economic recovery or cyclical improvement; it suggests a structural shift toward entrepreneurship.

The growth was particularly pronounced in certain years, with 2024 showing a notable spike. That year alone saw a 4.5% increase in the total number of small businesses compared to the previous year. This may be attributed to various factors, including improved access to digital tools for launching new ventures, enhanced funding opportunities, and policy support that made it easier to start and maintain small businesses.

In terms of economic impact, small businesses in 2024 made up 99.9% of all U.S. businesses. They also employed nearly 59 million people, or about 46% of the private workforce. These figures underscore the importance of small businesses not just in job creation, but in fostering innovation, supporting local economies, and contributing to national economic growth. Small businesses are often more nimble and adaptive than larger corporations, enabling them to capitalize on new trends and customer preferences more quickly.

The steady rise in new business formation also reflects shifting attitudes toward work and career. Many individuals are choosing entrepreneurship over traditional employment, often seeking greater autonomy, flexibility, and purpose. The gig economy and remote work culture, both of which gained momentum during the pandemic, have further empowered people to start their own ventures from home. As more people recognize the feasibility of self-employment, this trend is likely to continue.

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Policy Impacts on Small Business Growth

A major contributor to the rise in small businesses during the Trump administration was the implementation of policies designed to stimulate business activity. Chief among these was the Tax Cuts and Jobs Act of 2017, which introduced a 20% deduction for certain types of small businesses operating as pass-through entities. This deduction significantly reduced the tax burden on millions of sole proprietors, partnerships, and S-corporations, freeing up capital that could be reinvested into hiring, expansion, and innovation.

In addition to tax reform, the Trump administration emphasized deregulation as a way to promote business growth. Federal agencies were directed to eliminate two regulations for every new one implemented, a policy intended to reduce bureaucratic red tape. For small business owners, many of whom lack the resources to navigate complex regulatory environments, this shift provided breathing room and operational flexibility.

Access to capital also improved during this period. The Small Business Administration (SBA) reported a significant increase in approved loans for small manufacturers, with a 74% rise in 7(a) loan approvals within the first 90 days of the Trump presidency compared to the same period under the previous administration. These loans are critical for small businesses seeking to expand, purchase equipment, or manage cash flow. Easier access to funding helped catalyze new business creation across industries.

The administration also encouraged a pro-business narrative, which boosted confidence among entrepreneurs. When government officials vocally support business development and reduce perceived risks associated with entrepreneurship, more individuals feel empowered to launch their own enterprises. This psychological encouragement can be just as impactful as financial incentives.

While many of these policies sparked debate, particularly regarding their long-term implications, they undeniably created a short- to mid-term environment conducive to small business growth. As more entrepreneurs took advantage of tax breaks and regulatory ease, the national small business footprint expanded in both size and influence.

Sectoral Analysis: Manufacturing and Resale Businesses

Different sectors experienced varying degrees of growth during this period, with manufacturing and resale businesses standing out as particularly successful. In manufacturing, small businesses benefited from both policy shifts and broader market dynamics. As noted earlier, the SBA observed a dramatic increase in loan approvals for small manufacturers. This surge in funding supported the purchase of equipment, the opening of new production lines, and the hiring of skilled labor, revitalizing a sector that had previously seen years of decline due to offshoring and automation.

Tariff policies also played a role in stimulating domestic manufacturing. By imposing tariffs on imported goods, the administration aimed to incentivize local production and reduce dependency on foreign suppliers. While controversial, this strategy encouraged some small manufacturers to scale up operations in the U.S. to meet rising demand for domestically produced goods. In turn, this spurred job creation and regional economic growth in areas historically reliant on manufacturing.

The resale market also experienced robust growth, particularly among businesses selling secondhand or vintage goods. One illustrative case involved a Miami-based vintage clothing business that reported a 41% revenue increase following the implementation of tariffs on new textiles and apparel. As prices for new products rose due to import duties, consumers increasingly turned to more affordable secondhand alternatives. Small businesses in the resale space capitalized on this shift by expanding their inventories, leveraging online platforms, and marketing themselves as sustainable and cost-effective options.

Furthermore, consumer preferences began to favor locally sourced, sustainable, and niche products—areas where small businesses often excel. The combination of affordability, unique offerings, and environmental consciousness gave small resale businesses a competitive edge over mass-market retailers.

This sectoral diversification underscores how external policy decisions and evolving consumer habits can drive growth in specific industries. Small businesses that are agile, innovative, and responsive to such changes are better positioned to thrive in a dynamic economic environment.

Challenges and Criticisms

Despite the encouraging overall trend, the growth of small businesses during this era was not without challenges. One major point of contention was the implementation of tariffs. While they benefitted some domestic producers, they also increased the cost of imported raw materials and components, placing strain on small businesses that relied on global supply chains. For example, companies that manufactured their products overseas or sourced parts internationally saw their production costs spike, sometimes forcing them to pass these costs onto consumers or absorb them through reduced margins.

This unintended consequence was particularly difficult for startups and small firms that lacked the bargaining power of larger corporations. Increased costs could make their products less competitive or erode profitability altogether. Some small business owners publicly expressed concern that these trade policies, though intended to protect American jobs, were putting their companies at risk.

Budget decisions also raised concerns. The Trump administration proposed significant cuts to the SBA’s budget and attempted to eliminate the Minority Business Development Agency (MBDA), a federal agency that provides support to minority-owned businesses. These moves were criticized for potentially reducing access to essential resources and support networks that help underrepresented entrepreneurs succeed.

Another issue was the mixed signals coming from the federal government. While some policies supported business growth, others—such as fluctuating immigration rules, trade policy reversals, and budget uncertainties—created an unpredictable environment. Small business owners typically operate on thin margins and short planning cycles, so sudden changes in regulations or economic direction can have outsized effects.

Moreover, although certain policy changes improved conditions for established businesses, some critics argue that newer or smaller firms—especially those without access to legal and financial expertise—struggled to fully capitalize on them. The benefits of tax deductions and regulatory relief, for instance, were not always accessible or clearly understood by the smallest players in the economy.

Future Outlook

As the U.S. economy continues to evolve, small businesses are expected to remain central to its growth. Looking forward, several trends and policy developments are likely to shape the future of small business in America. One of the most significant is the potential extension of the 20% pass-through tax deduction. Economists project that maintaining this deduction could result in substantial economic gains, including hundreds of billions in GDP growth over the next decade and the creation of millions of new jobs.

Technological innovation will also play a pivotal role. The proliferation of e-commerce platforms, digital payment systems, and remote work technologies has lowered barriers to entry for entrepreneurs. Starting a business today often requires little more than a laptop and internet access, making entrepreneurship more accessible than ever before.

In addition, shifts in consumer behavior—toward sustainability, personalization, and ethical sourcing—will continue to open up opportunities for small businesses that can meet these demands. This is particularly true for businesses that emphasize local production, environmentally friendly practices, and community engagement.

However, challenges remain. Access to affordable healthcare, the rising cost of commercial real estate, and the need for skilled labor are all ongoing issues for small businesses. Furthermore, macroeconomic factors such as inflation, interest rates, and global instability can influence both consumer spending and business investment.

To sustain the momentum of recent years, policymakers must strike a careful balance. Continued support through favorable tax policies, expanded access to funding, and investments in infrastructure and education will be critical. At the same time, efforts to ensure stability, predictability, and fairness—especially for marginalized business owners—will determine whether the growth of small businesses benefits the economy as a whole.

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Conclusion

The rise of small businesses since 2017 has been a defining feature of the American economic story in recent years. Driven by favorable tax policies, deregulation, increased access to capital, and a surge in entrepreneurial ambition, the small business sector has grown in both size and significance. While certain policies and global trends introduced new challenges, the overall trajectory has been positive.

Small businesses not only create jobs and foster innovation but also serve as vital contributors to local communities and engines of social mobility. As the U.S. continues to grapple with economic and societal shifts, the role of small businesses will become even more important. Ensuring their continued success will require thoughtful policy, inclusive economic planning, and an environment that rewards initiative, creativity, and resilience. If these conditions are met, the next decade could see small businesses play an even greater role in shaping the future of the American economy.