There is a phrase Americans hear constantly and almost never examine.
“Small businesses are the backbone of the American economy.” It shows up in political speeches across the spectrum. It shows up in chamber of commerce literature. It shows up in advertising for everything from accounting software to banks. It is one of those phrases that has been repeated so many times it has lost any specific meaning, the way “innovation” or “world-class” or “best-in-class” have.
But underneath the phrase, there is actual data. And the data turns out to be more interesting than the cliché.
What A Small Business Neighborhood Looks Like
If you walk into a neighborhood dominated by small businesses, a few things are immediately obvious.
The signs are different. Each storefront has its own logo, its own typeface, its own approach to the window display. The signage is not standardized the way a chain’s signage is. It looks varied, sometimes a little chaotic, in a way that gives the street character.
The product mix is different. Each store has a slightly different selection, even within the same category. There are three coffee shops on the block, but they are not the same coffee shop. There are four restaurants, but they are not interchangeable. You can build an actual preference for one over the other based on differences in approach.
The people behind the counters are different. In a small business, the person at the counter is often the person who owns the place, or someone closely connected to them. They have opinions about the products. They can answer questions. They are reachable in a way that a chain employee, through no fault of their own, is not.
And the money stays differently. Small businesses tend to spend more of their revenue locally, including on local suppliers, local accountants, local landlords, and local employees who live nearby. The dollars circulate within the neighborhood rather than flowing immediately back to a corporate headquarters. Over time, this pattern adds up to a substantial difference in the economic strength of the surrounding blocks.
The Waldo Pattern
Kansas City has several neighborhoods that fit this pattern, but Waldo is one of the cleaner examples.
The commercial corridor along West 75th Street and the cross streets through Waldo has retained an unusual density of small, independent businesses. Some of them have been there for decades. Some are recent arrivals. Almost none of them are national chains in any strict sense. The mix has shifted over the years as businesses come and go, but the underlying pattern has been remarkably stable since the neighborhood took its current shape.
Part of what makes this work is the building stock. Waldo’s commercial buildings are older, with most of them dating to the streetcar era of the early twentieth century, and they were built at a scale that fits small independent operators. The storefronts are not large enough for most chains to be interested in them. The lots are small enough that no one is going to assemble several of them into a strip mall any time soon. The neighborhood has, in effect, locked itself into a small-business commercial pattern by way of physical design.
Part of what makes it work is foot traffic. People walk in Waldo in a way they do not in most American neighborhoods of similar size. The residential density supports the commercial corridor, and the commercial corridor gives people reasons to walk. Both halves are necessary. Either one alone would not produce the result.
One of the newer additions to the Waldo commercial mix is a small specialty store (strictly for adults 21+) just off the main corridor on West 74th Street. It operates on the same model that most of the longer-established Waldo businesses use: a small storefront, a curated selection, a person behind the counter who can talk through what is on the shelves. You can read more here for a look at how a new business fits into a neighborhood like this.
It is one example of the broader Waldo pattern. The neighborhood absorbs new specialty retailers continuously, because the conditions that make small businesses viable have been stable there for a long time.
Why The Buildings Matter
It is worth saying clearly that the small-business pattern is not just about the businesses. It is about the physical conditions that allow small businesses to exist.
The buildings determine the rent. A small operator can afford an older storefront on a small lot in a way they cannot afford new construction on a large lot. The building age effectively acts as a rent control mechanism, keeping the commercial corridor accessible to operators who would be priced out of anywhere new.
The street layout determines the foot traffic. A narrow street with short blocks and a continuous storefront frontage produces walkers. A wide arterial with parking-lot setbacks and long blocks produces drivers. The walking pattern is what feeds the small businesses; the driving pattern feeds the chains.
The zoning determines what can be mixed. Older neighborhoods are usually zoned for mixed-use development at a small scale, which means a single block can support residential apartments, ground-floor retail, a couple of restaurants, and a small office or two. Mixed use creates the population density that small businesses need to survive. Single-use zoning, common in newer development, separates everything and undermines the mix.
All of these are physical and regulatory facts about the neighborhood. None of them are about the business owners themselves. The owners can be brilliant, but if the underlying conditions are wrong, the businesses will fail. Conversely, the conditions can be right, and even mediocre operators can do reasonably well in them.
What The Federal Numbers Show
The cliché about small business as economic backbone turns out to have a specific numerical basis worth knowing about.
The most recent figures from the SBA Office of Advocacy, an independent office within the U.S. Small Business Administration that produces annual small business profiles, put the total number of small businesses in the United States at 36.2 million. Together, those businesses account for nearly 46 percent of private sector employment. From March 2023 to March 2024, U.S. small businesses created approximately nine out of every ten net new jobs in the country.
Read those numbers slowly. Forty-six percent of the private workforce. Nine out of ten net new jobs.
The phrase is not a cliché. It is a literal description of how the American economy is structured. The thing that makes it sound like a cliché is that the number is so large and so consistent over time that it has stopped registering as a fact. It just feels like background noise.
The reason this matters is that small businesses are not evenly distributed. They concentrate. They concentrate in particular states, particular cities, and within those cities, particular neighborhoods. Some neighborhoods are dominated by small businesses; others are dominated by chains; the differences between the two are visible from the sidewalk and tend to compound over decades.
What To Do With This
If you live near a neighborhood like Waldo, use it. Walk the commercial blocks. Spend money at the small shops. Notice which businesses have been there a long time and which are newer arrivals. Talk to the people at the counters; that is where the difference between a small business neighborhood and a chain corridor is most directly visible.
If your city has neighborhoods like this and is making decisions that threaten them, including parking-driven development, zoning changes that favor large lot consolidation, or tax abatements for chain developers, those decisions are worth paying attention to. The small business statistics that make for nice campaign speeches do not protect themselves. They depend on the physical conditions that produce them, and those conditions can be lost in ways that are hard to reverse.
The “backbone of the American economy” turns out to be a literal claim. The backbone is in the neighborhoods. The neighborhoods are worth keeping.
