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Small businesses and their role in the economy


eThe Importance of Small businesses

small businesses

The role of small businesses in the economy is a recurring  topic on the news. Often these businesses are used as  political tools to gain  favor with citizens. Therefore, it would be prudent to understand some of the key factors surrounding small businesses.

Small businesses employ a majority of the workforce in the private sector. People see small businesses as champions of locally made/grown products,especially organic products. A good example of a small business is a neighborhood coffee shop. The owner of the business is typically present during business hours and  might employ 4- 5  employees.

It is important to note that not all small business owners intend to grow into big corporations. Most of them are happy to reach a level where they can maintain their business and support themselves and their families. Others dream of expanding their businesses, hiring more employees, and  becoming household names. In the end, it isn’t important how big the business is or will grow to be because they play a key role in the health of the economy.

What  they do for the economy:

In addition to being a direct generator of jobs,small businesses also generate jobs indirectly. In the  coffee shop  example, for instance, the owner generates business for the  coffee provider, pays rent to the owner of the facility for the shop , pays for the transportation of  products, and has to pay for house cleaning services. They  also purchase many  products, which include food, clothing, and gas . Lastly, the taxes they pay every year help to create more businesses and jobs.

As the owner or  employee of a small business, one might be expected to be the chief planner, accountant, customer contact agent, and marketing specialist for the company’s  products or services.  The ability to quickly adjust  to the changing nature of a business and the economy is critical. This makes small businesses dependent on  the overall stability of the economy. Small businesses are more likely to succeed when the economy is stable and people are able to make a lot of purchases.

Small businesses help create  creativity, independence from large corporations and government and also to generate a free market economy. It is imperative we support them and find ways to help them expand.

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