Why Millions of Small Businesses Never Cross Into Hiring or Exporting

September 9, 2026

Terrand Smith, Founder/CEO, 37 Oaks

As 37 Oaks expands globally, I keep meeting the same small business, and it's starting to feel like more than a coincidence. Different countries, different products, but the same profile: a founder on a daily grind, supporting a family, powering their community, servicing customers, bringing in sales, but the business hasn't progressed to the stage of job creation or export growth. They are running the entire operation without a team, founder-centric in the truest sense, and haven't been able to build the infrastructure capable of servicing customers outside their own borders in great volume.

There's nothing wrong with making the deliberate decision to stay at this stage. Everyone has different growth goals, and staying small can be exactly the right call for a founder who values that. But it does create a real tension worth naming: the business owners who want to grow are getting stuck somewhere, and the countries they operate in have a stake in that growth too, since more hiring and more exporting translate directly into local jobs, tax revenue, and economic resilience.

What I see is jobs at home and earnings from exports, both appearing to stall at the same point in the business life cycle. I've watched this play out in different countries at different stages of development, from the US to Uzbekistan, Kyrgyzstan, Kenya, and Vietnam. Given how much countries depend on their small businesses, a pattern this consistent isn't something to look past. It's something worth unpacking.

Closing the Growth Readiness Gap

I have noticed that although these economies have many differences, there is a common thread. Most small business support and capital investment focus on getting started and getting sold. Startup support is abundant, with pitch competitions, incubators, first-time loans, and investment resources, and support are focused on what appears to be sellable and later-stage businesses (see my blog, "Most Small Businesses Don't Sell. They Stop.," [insert link] for more on this).[1]

This bookend thinking isn't a new concept. Development economists have a name for the part that sits in between: the Missing Middle describes businesses too large for microfinance and too small, unproven, or undocumented for a bank loan.

It's usually framed as a financing story, but I see a different version of the same gap. Across very different economies, development and investment infrastructure tends to organize around the same two checkpoints, launch and exit, with far less built out deliberately for what happens between them. Some of that middle infrastructure exists in pockets, more in some markets than others, but not at the scale or consistency of what surrounds those two bookend moments. The businesses sitting in this gap, across multiple countries, are stuck in this stage, a stall that's holding back so much potential economic impact.

In the United States, 82.3% of small businesses, nearly 30 million of them, operate with no employees beyond the founder.[2]

Of those, only about 1% cross into hiring a first employee in any given year, according to research from the SBA's Office of Advocacy.[3]

Financing is more available in the US than in almost any other market in the world, and the stall persists anyway. This helps prove that it's not only a financing gap, but an operational infrastructure one too.

The same imbalance shows up in Kyrgyzstan, where individual and self-employed entrepreneurs make up more than 90% of all registered enterprises, yet generate only about 23% of the country's GDP.[4] This is a related pattern, seen from a different angle. Kyrgyzstan has an abundance of entrepreneurs instead of abundant capital, and the stall still happens there too. Capital and entrepreneurs are both abundant supply. What's scarce in both places is the same thing: the operational infrastructure needed to put either to work.

I call this the Growth Readiness Gap: a shortage of the operational infrastructure that lets a business use capital well, turning it into growth, impact, and sustainability. This is the stage where we see economic impact happen most. A business crosses from founder-centric into job-creating only once it has the structure to support someone besides its founder: financial and marketing systems, quality control, technology tools, standard operating procedures, pricing frameworks, and streamlined fulfillment processes that reduce inefficiency instead of hiding it. It's a way of operating that doesn't depend entirely on one person's daily attention, or require the founder standing over every transaction. That structure doesn't build itself. Close that gap, and the payoff isn't abstract. It shows up in two concrete places: job creation and export growth.

Job Creation

What would it actually mean if more of these founder-centric businesses crossed into hiring? In the US, where the current crossing rate is about 1% of nonemployer firms a year, even doubling or tripling that rate translates to hundreds of thousands of new jobs and tens of billions of dollars in added economic output.[5] At the current rate, roughly 298,000 businesses cross into hiring annually, worth an estimated 56 billion dollars. At 3 times that rate, it's closer to 894,000 new jobs and 168 billion dollars.

Vietnam doesn't have an equivalent measured baseline to anchor a current rate, but applying the same illustrative range, 1 to 3% of its 5.3 million household businesses[6] crossing into hiring, produces a range of roughly 53,000 to 159,000 new jobs, worth an estimated 450 million to 1.35 billion dollars.[7] Small movement, at this scale of population, adds up to measurable numbers.

Youth unemployment is a shared challenge amongst many countries globally, and it's directly tied to what's at stake here. It climbed to 12.4% worldwide in 2025,[8] and in Kenya specifically, it sits at just over 15% by that same measure.[9] Across the low- and lower-middle-income economies, nearly nine in ten young workers are employed informally rather than in a formal job, working without contracts, protections, or a clear path forward.

That's exactly the kind of formal job a founder-centric business is positioned to provide when they close the Growth Readiness Gap. Unlike large employers, these businesses already sit inside the same communities where youth unemployment is highest, run by founders who know the local market and workforce firsthand. What stands between these businesses and hiring is the same operational infrastructure gap already described. Founders can't bring someone on until the business itself is ready to support them. Closing that gap doesn't just create formal jobs, it opens the door to reaching customers beyond a business's own borders.

Export Growth

This is what we know: businesses that export are larger, more productive, and employ more people than similar businesses that don't, in the same industry, at the same size. Research shows these traits exist before a business ever starts exporting, not after.[10]

Exporting doesn't build a stronger business; a stronger business is what makes exporting possible.

That foundation comes from closing the same Growth Readiness Gap described earlier.

Uzbekistan is a landlocked country, and its national development strategy treats regional trade positioning as a deliberate priority. It's one of the clearest examples of a government that already understands export capacity as strategic.[11] What's still developing is whether the businesses themselves, mostly still founder-centric, have closed enough of the Growth Readiness Gap to support this ambition.

Vietnam is a great example of a country that ties both hiring and export outcomes together in a single data set. Their small and medium enterprises now number over 900,000, generate more than a million new jobs a year, and account for roughly 40% of GDP and 30% of export turnover. The World Bank's own assessment states the case directly: lasting job creation depends on the growth of export-oriented private businesses, not business creation in general.[12] Same operational infrastructure, two outcomes.

The Case For Investing Here

None of this argues every founder-centric business in these markets will eventually hire a team or deliver products or services overseas. The point is volume. This middle population is the pipeline to businesses capable of hiring and exporting. Scaling is where the economic impact begins. Move even a fraction of a population this large through the Growth Readiness Gap, and the effect adds up to far more than any single success story could produce on its own.

This isn't a challenge unique to one country, one region, or one stage of development. The same stall showed up in the US, in Uzbekistan, in Kyrgyzstan, in Kenya, in Vietnam, in very different economies. That consistency is the signal that this gap isn't a symptom of any single country's policy or market condition, but it is structural and global. That also means the value is already evident, and it's not something to wait to see. The jobs, the local spending, and the tax base being generated already exist today, across every one of these markets. What's missing isn't potential. It's the operational infrastructure that turns that potential into hiring and exporting, consistently and in volume.

I mentioned that not every founder wants this. Plenty are exactly where they want to be, and that choice is to be respected. But for the founders who do want more, and for the countries counting on that growth to show up as jobs and export earnings, the barrier may very well be the Growth Readiness Gap. These aren't startups looking for a first customer. They're looking for deliberate, structured education and operational support that helps them build the business infrastructure to cross that gap into hiring and exporting.

Workforce development and export promotion are usually treated as entirely separate fields, run by different agencies, funded through different budgets. But for this population, they come from the same source: the operational infrastructure that lets a founder-centric business finally hire, and finally reach a customer outside its own borders.

Governments, financial institutions, corporations, economic development organizations, and foundations each have a stake in this population, for their own reasons. But it's the same population, in the millions, and for most of them, the path forward starts in the same place: closing the Growth Readiness Gap.

Terrand Smith

Founder/CEO

37 Oaks

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Sources

1. 37 Oaks, "Most Small Businesses Don't Sell. They Stop." — https://www.37oaks.com/post/most-small-businesses-don-t-sell-they-stop

2. U.S. Census Bureau — nonemployer statistics (82.3%, 29.8 million businesses): https://www.census.gov/programs-surveys/nonemployer-statistics.html

3. U.S. Small Business Administration, Office of Advocacy — nonemployer hiring rate: https://advocacy.sba.gov/2013/12/01/crossing-the-employer-threshold-determinants-of-firms-hiring-their-first-employee/

4. Kyrgyzstan SME sector research — individual entrepreneurs' share of enterprises vs. GDP: https://ieg.worldbankgroup.org/evaluations/world-bank-group-kyrgyz-republic/chapter-1-background-and-country-context-0 (supporting: https://www.brookings.edu/articles/whats-holding-back-the-kyrgyz-republic-private-sector/)

5. U.S. Bureau of Economic Analysis and Bureau of Labor Statistics — basis for US scenario dollar estimates (general): https://www.bea.gov/data/gdp and https://www.bls.gov/data/

6. Vietnam economic census — household business count (5.3 million): https://vietnamnews.vn/economy/1785346/firms-remain-key-driver-of-viet-nam-s-economic-growth-2026-economic-census.html

7. Vietnam General Statistics Office — labor productivity data, basis for Vietnam scenario dollar estimates (general): https://www.gso.gov.vn/en/homepage/

8. International Labour Organization — global youth employment trends: https://www.ilo.org/resource/news/youth-unemployment-rises-young-people-face-harder-road-decent-work

9. World Bank / ILO modeled estimate — Kenya youth unemployment rate (general, ILOSTAT modeled estimates): https://ilostat.ilo.org/data/

10. Exporter wage and productivity premium research: https://link.springer.com/article/10.1007/s10290-010-0049-7

11. World Bank — Uzbekistan Country Partnership Framework: https://www.worldbank.org/ext/en/country/uzbekistan

12. World Bank — "SMEs in Vietnam: On the Road to Prosperity": https://documents.worldbank.org/en/publication/documents-reports/documentdetail/750271468321567462/smes-in-vietnam-on-the-road-to-prosperity