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.
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.