The Numbers Behind TikTok’s Impact on Small Businesses

The Numbers Behind TikTok’s Impact on Small Businesses

Social media giant TikTok has been a mainstay on our mobile devices since it was launched in 2016 by the Chinese tech company ByteDance. Its impact on small business survival has been impressive, as companies leverage its short-form videos to advertise their goods and services—and reach a wider audience than they could through other forms of traditional social media. Per Investopedia, “brands open user accounts on TikTok and, just like any of its users, create and post mini-videos. They can pay to promote their videos to other users. The ultimate goal is to go viral and spur takeoffs, drawing in a huge audience for the brand’s message. Light, fun campaigns set to music hit the spot.”  TikTok currently boasts over 1 billion monthly average users, putting it in 4th place—just behind Instagram, YouTube, and Facebook.

TikTok, however, has been facing an uphill battle on none other than Capitol Hill. In mid-March, the House passed a bill that would effectively create a nationwide ban on the app if its China-based owner doesn’t sell its stake in the company. Lawmakers are becoming increasingly concerned that TikTok’s ownership structure is a threat to our national security; the fear is that the Chinese government “could demand access to the data of TikTok’s consumers in the U.S. whenever it wants. The worry stems from a set of Chinese national security laws that compel organizations to assist with intelligence gathering,” according to the AP.

The potential ban has unleashed a ton of backlash from those in the small business world, who rely on the platform to generate revenue for their businesses. Ahead of this potential ban, ByteDance put out the TikTok Economic Impact Report (the study was done by Oxford Economics) to showcase just how valuable the company is to small- to mid-size businesses (SMBs). The report notes that TikTok generated $14.7 billion for SMBs in 2023, with an additional $24.2 billion in total economic activity. It also claims that more than 7 million businesses in the United States rely on the platform, and 224,000 jobs were supported just because of small business activity on TikTok in 2023. The app generated $5.3 billion in tax revenue through small business activity (which includes its use as a marketing and advertising tool). Over half—52 percent—of survey respondents say they rely on the app to stay competitive in the market.

“TikTok delivers more than just entertainment—it fuels significant economic growth for US businesses and the US economy as a whole. The platform’s economic impact cannot be understated or ignored. Data shows it’s a major contributor to the US economy, driving billions of dollars in growth, supporting hundreds of thousands of US jobs, and delivering a competitive edge to small businesses across the nation,” says the Economic Impact website.

There is data (and outrage) out there to support keeping TikTik up and running, and this bill still needs to pass the Senate where it faces challenges from both parties. So far, no one has committed to taking up the legislation once the House sends it through. In the meantime, TikTok has been urging users to write to Congress to stop a shut down.

We’ll continue to keep an eye on what’s happening in Washington as it pertains to TikTok. In the meantime, stay tuned to the Financial Pantry for the latest news, legislation, and tips for small business owners like you.

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