Small business is vital to keeping our country’s economy running strong, and helping to fulfill our citizens. Not only does small business give any person the ability to pursue their own happiness and make a living for themselves, but it is also the main source of job creation in the United States. Small business keeps the economy thriving by paying nearly half of the wages of the U.S. population, being a huge part of global exports, paying taxes, and giving employees the spending power to keep the economy moving forward. The competition that small business provides to big business helps to keep prices low across the market and keeps customer service standards high. Due to their small-scale hierarchies they are able to communicate fast changes, and lead the way for innovation and invention; even in times of economic crisis. Here are the benefits of small businesses.
Freedom of Opportunity
Anyone has the ability to start a small business, and that instills a sense of freedom and vast opportunity into the population. Depending on the industry, small businesses typically require very little capital to start up. Regional banks and credit unions have loan programs to help locals actualize their business plans.
With the doorways open, the only other elements required are hard work, a self-driven attitude, determination, and a dream that can last long enough to come to fruition. Through these efforts, anyone can experience the freedom to make a better living for themselves without having to rely on an employer or a big business for their income.
Massive Job Creation
One of the most important parts of small business is job creation. After putting in so much work to start a new business, entrepreneurs typically wait for their business to start showing decent income potential, and then they begin hiring help. Small businesses are much more likely to hire locals from their own area.
According to the U.S. Small Business Administration Office of Advocacy, small businesses created 8.4 million jobs – or 65.9 percent of all new jobs created – between 2000 and 2017. That’s 8.4 million people bringing home an income each month, and then spend their money on what they need, and what they want. Through this cycle of paying and spending, the economy effectively sustains itself.
This is especially important to economic stability – and growth – in more rural areas, and small towns. Since local residents are normally more loyal to small business over large business, small business has the opportunity to continue to grow and create even more jobs for the area. Many small businesses open branches or sister locations in neighboring towns, which leads to even greater job creation.
Competition Between Big and Small Business
Small and large businesses in an area tend to compete with each other to offer the best price on goods. Although big businesses can sometimes offer cheaper goods due to very large bulk ordering – or perhaps owning their own production factories and farms – small businesses can compete and offer low prices due to low overhead cost and low fees in general. Small businesses rent smaller buildings, and therefore consume fewer utilities, creating lower bills. Localized smaller-scale suppliers and other small business owners typically give each other good deals. Since they are sometimes located near each other, shipping costs can be cut out of the bill as well. This makes the final product cost much less due to less spending.
In general, this is great for consumers, because their competitions to offer the best pricing ends up saving money for everyone. Without this kind of healthy competition, only one provider would sell a specific product, and they would be able to charge a higher price since no competitor existed.
Ease of Change
The scale of a small business is perfect for evolution. When there is a problem it’s very easy to identify what that problem is – or for the customers to point out the problem – and make the owners aware.
In big business, even if a problem can be identified, it then has to travel up a large chain of command to get to the person or people who can implement a plan of change. From there, the plan has to be communicated back down the chain, and must be consistently implemented to keep the problem from returning. That can be difficult for big business since they have so many business locations and mass amounts of employees.
In a small business, any problem can be communicated to the owner quickly, and the small team of workers can be informed and trained on how to solve the problem. With this ease of evolution built into the small business structure, it makes it simple to keep customers happy.
Flexibility to Economic Change
Along with the quick problem solving and adaptability that small businesses possess, they’re also able to stay flexible to economic changes. Customers stay loyal to local small businesses even in rough economic times, but the businesses also have the adaptability to offer discounts or try to shop for less expensive supplies to lower their costs. This mutually beneficial relationship ends up keeping the economy in a more healthy state than if the small business had closed due to lack of customers. People spend at the small business, the business stays open, and the business creates jobs, and pays locals.
Small business owners usually have their ear to the community pulse, and can quickly adapt to fit their customer’s new needs. In a downturned economic climate, they may change their business tactics to offer new products or services that would be more useful to their customers.
Care for the Customer
Something that can be found in most small businesses is a more friendly and intimate approach to their customer base. Since these business owners are serving the people of their own town, they care more about great customer service and delivering a quality product.
Not only that, but they know if they’re producing outstanding goods – or supplying great service – they know their customers will advertise for them. Small business receives a lot of their growing customer base simply from word-of-mouth recommendations from friends.
Through small business giving this kind of attention and extra care to their customer base, it causes big business to stay adamant to make customers feel welcome and valued in their stores as well. This is important because everyone should be treated with dignity and respect.
Since anyone can start a small business, many different people from a diverse set of backgrounds, with a diverse set of skills can offer new services and products. This leads to a huge variety in each town or city and gives a bountiful amount of choices to customers. Having all of these options on what to experience, and where to spend money, makes people happier.
On top of the joy that choice brings, people have the chance to experience many other cultures without having to travel very far. Food from all over the world can be sampled from within your own state. This is due to the ease of starting small businesses, and the talented people who chose to immigrate to the U.S.
Small business owners make up the majority of the United States exporters, with big business only adding up to a small 3 percent. The export contributions of small business owners have a huge impact on our economy, and our global trade participation. Without them, the United States would lose roughly one quarter the value of their exports; which would severely damage our economy. It may be called small business, but together they make a huge difference in the world, and in the U.S.
Improvements and Inventions
Due to the ease of which small businesses can change and flow through problems, it’s no surprise that their small-scale communication allows for more creative inventing than larger companies. Employees of small companies are encouraged to reach out if they see a solution to a problem or a way to innovate and save the business time or money. Since it’s so easy to communicate directly with the owner, these ideas can be discussed, developed, and implemented in a short amount of time. Also, when something new is invented that is widely useful, a company’s value can explode as investors take an interest.
When small businesses thrive, so do their towns, counties, and states. The more a small business is able to make, the more money goes towards local taxes. This money improves the community greatly and is spent on local projects, schools, and keeping the town safe by providing funding to the police and fire departments. In this way, whenever locals spend their money at local businesses, they are giving back to their community by ensuring that the government systems have the funding they need to thrive.
The efforts of small business will continue to benefit our global and local economy for millennia to come. Through their ability to create products and businesses, the entire world benefits. Small business could not be more important.