The chances of a newly-established business to survive in the modern economy are minimal. A good number of start-ups get terminated before their first anniversary due to different factors.
The first is the stiff competition these businesses face with other well-established firms. Large businesses are already firm in their respective industries and can offer lower prices. As a result, customers opt for firms where they spend less.
Because the small businesses cannot cope with the huge price reduction, they are forced to terminate their services. Moreover, the start-ups do not have qualified personnel to manage them. They end up crumbling because of poor management.
Additionally, financial institutions such as banks do not feel comfortable lending small businesses. That means these ventures cannot expand. They remain small for a long period while suffering from low-profit margins. In the end, the owners dissolve them.
However, those who survive for a long time offer the economy many benefits. Some advantages of having these businesses in the economy include:
Provide Employment to the Local Citizens
Unemployment is a problem that most economies suffer from. The rate in developing countries goes as high as 70%. This level is not healthy. Fortunately, small businesses employ locals. The impact is that people get an income that enables them to purchase different commodities such as food and clothing. Therefore, their living standards are elevated. Secondly, the crime rates reduce as those who would have resorted to robbery to get an income are gainfully employed. This is a good thing for any economy.
How can the government encourage the growth of these businesses? The first method is to create an enabling environment where people feel comfortable starting these businesses. Motivation can come in the form of reducing the processes that one has to go through in a bid to establish such businesses. Another incentive is to make access to capital easier so that most people can find it convenient to change their ideas to established businesses.
Encourage an Entrepreneurial Spirit Among the Youth
Most people feel that businesses are difficult to begin because they do not see people who have established a successful business from the start. What they see is an essay writer who gives the motivation and the need to establish a business without providing his or her own practical example.
With the existence of small businesses within an economy, young people can see practically how the people began and the way they have moved through leaps and bounds to become established brands. That acts as an inspiration to those who want to establish their business as well. The result is that people can find alternative employment channels thus solving the unemployment problems.
In some areas, people such as Tej Kohli who run these businesses have created successful and established centers where the others are trained on how to manage their own ventures. Such communities reap large from the ventures as they can get the requisite business skills.
Involvement in Critical Community Projects
People who own and run small businesses are a critical part of the communities where they have established their ventures. They acknowledge the fact that their decisions influence other people in the area. More importantly, they contribute to the improvement of society. The areas where their impact is felt include:
- Sponsorship of local sports
- Donations to those who are less privileged in the society such as homeless people
- Organizing other charity events
Avail Essential Goods and Services to People
A society cannot exist on its own. People need a lot of things, including food, clothing, and other luxuries that make their lives better. Additionally, the services that are important include education and education among others. Unfortunately, the government may not adequately provide these commodities. It is these businesses that avail the deficits. This makes the community better.
Businesses also establish important infrastructure within the societies where they operate, such as roads, electricity connections, and water. Such things improve the general standing of the community.
People tend to notice the success of big corporations and overlook the contribution of small ventures. However, it is important to realize it is small ideas that eventually led to the establishment of the global businesses we observe today. Companies like Facebook and Coca-Cola were previously unknown until they become large. Therefore, small businesses should not be ignored.