Small business is the backbone of the economy. Every nation is a group of states and cities and has its own living standards and demands.
Small business plays the biggest role to fulfill daily life, social, and business demands. Every small business is a part of the community that is started to help people and get profit.
And every human deserves to be profitable. some do it by starting a small business, some do it by starting an online business and many do it through professions and jobs.
There are millions of small business owners and startups around the globe. And most of them are to full fill the demands of society in exchange for money.
So, let’s understand in more detail why small businesses, shops, and service providers are important in the community, society, cities, metros, and villages.
How small businesses transform the economy and how it impacts economic growth.
1. People getting products/services quickly:
The nearest shops, markets, and service providers are the first and easiest option for people for shopping. Especially daily needs items such as milk and food-related stuff. The nearest shops in residence or society are always open. And many small businesses/shops deliver products and items to the home.
Following are the small business /Services/Product Provider that is very important in each society or small city:
- Grocery store
- Plumber/Plumbing Services
- The primary health care center
- Jim/Yoga Meditation Center
- Sanitary items
- Beauty parlor and salon
- Clothes store
- Shoe store
- Mobile/Electronics repair/recharge shop
- Private or public Parking
- Petrol Pump
- Computer Institute
- Private/Government Schools
- Cleaning and home maintenance service provider
- Car/two-wheeler Mechanic
- Community/Marriage/Event Hall
- Cyber Café
- Gift Shops
- Sweet shops
- Electronics Shops
- Legal Consultant
And many others.
All of us use these services daily. And it’s important to all of us as per our living standards. That’s why you will find these shops in each market/place/community where the population is more than 10,000+ people. And with more than 100000+ people you will find more variety and bigger shops and malls. There are wholesalers, manufacturers, contractors, designers, sellers, marketers, entertainers and various kinds of personal/business service providers.
There are large markets and small markets in every area of the world. And each market has its own needs and demands. Those are fully filled by bigger businesses and manufacturers. And in between these, there are millions of people working night and day to provide services/products for people.
People have needs and desires to live. We all are the developed version of early men. And our coming generations are more developed versions of a human than us. We all are part of this nature. If there is no human there is no nature. And if there is no nature then there is no human. And in between these circles/communities/locations, we’re living, consuming, creating, and distributing.
Today, there are governments and systems that manage, and control people and try to make it possible so that each human being can live happily, freely, flexibly, and wealthily. And in return for this, they charge tax, and they create laws and regulations.
And many of them just become political leaders/flatterers/corrupt/gurus/ to become rich/enjoyer/luxurious/ and live the life of a king by making educated and no educated people fool.
But the men/women who are there 24/7 are small business owners and/her team providing services/products for society. Who face thousands of difficulties from society, government, friends, and many others while running their business.
None of us, government, bigger companies, or political leaders can survive without small businesses. It’s because small businesses are part of the economy. Small businesses are the first party who solve the problem of customers/people before bigger companies. That’s why small businesses are important in every society, and nation for economic, social, and entrepreneurship development.
2. Small Businesses/shops are platforms for selling products and services:
Both small businesses and big businesses depend on each other for growth. Big brands attract customers for the products/services by investing heavily in advertising. And they use small business owners/franchisees/shops and local businesses to distribute their products/services to customers. Now it’s important for small business owners to get the stock at a low price, good margin and sell fast. So that both can take advantage of advertising.
But mostly big brands depend on small business owners for more demands. The growth of bigger brands is slower than the growth of small business owners. It’s because small businesses have the option to choose the products/manufacturer/supplier. And they ignore popular brands due to lower margins.
All they want more sales. But they will do it if they are getting the stock with a good profit margin. Else they will move to the less popular brand with a good margin and then they will sell that to the customer.
Customer demands are most important. But if the small businesses/shops stop selling the popular brand in a particular market, then it will be a loss for big businesses and suppliers. So, whatever the math, it’s important for big companies to supply and provide a good margin too small business owners and dealers.
Even many bigger brands are using almost all the platforms online and offline to sell their products. But without small businesses, they can’t survive.
Small businesses play the most important role to create a franchise network, distribution channels, service centers, shopping malls, and business chains all around the globe for bigger companies.
That’s why small businesses are important to create balanced economic activities in the market.
3. Employment opportunities for skilled and unskilled people:
The people working in shops, factories, and companies are the most important assets for all types of businesses. When someone starts, runs, and grows a small business then he/she helps the government, society, and nation to reduce the unemployment problem.
For example, you’re doing a job for the last 10 years in a company. Now you want to start your own startup. When you do it following things happen in employment cases:
- You provide yourself employment called self-employed.
- When you start, manage and run a business then you will be able to provide jobs/work for 1 to 100+ people. It will create employment in the area, state, a city where you’re running the business.
- Due to your startups, 1000’s+ other people get work. For painters, carpenters, plumbers, electricians, web developers, writers, marketers, and many others. When you start/run you also shop for computers, internet, domain, and hosting for your business. You take email marketing services; you use social media.
Not only that when you start, you register the business and also apply for a GST number, and bank account, buy stock or raw materials and you do lots of other things with the help of other people in exchange for money.
Now all these people getting benefits from you as an employee, job seekers, service providers, and freelancers.
- When you leave your job, then someone others get the employment opportunity to work in your position.
That’s why small businesses are important to provide employment opportunities for job seekers and experts. Starting a business is not just a business. It’s a noble work and profession to be an entrepreneur or businessman/woman.
4. Entrepreneurship Development:
Today’s small business owners such as tea stall owners can be tomorrow’s biggest tea brand/manufacturer/supplier/company. Anything can possible. Small business owners always have the opportunity to grow big and become billion-dollar+ worth entrepreneurs. The big brand of today, was the small business yesterday.
For example, out of 100 small businesses, 1 will become a billion-dollar company. Many remain small for their whole life as per the business model and business plan. But many of them grow from small to medium and medium to the biggest companies in the world.
Inspiration is the most important factor in entrepreneurship development in any country. If in each city 1 person is running a big company then it will become the inspiration for other small businesses, students, and startups.
5. Perfect competition in the market:
Today many countries are facing the problem of capitalism. It means only a few companies are holding more capital. And due to them, they are changing the market demand and customer habits. It impacts small businesses as well.
For example, 1 brand is selling its products online through an eCommerce website, but they are also selling that through shopkeepers/wholesalers and local suppliers.
But if there is only one brand selling more online then it’s creating a monopoly in the market. Due to that thousands of businesses and people face problems. One seller sells more at a high price due to a monopoly. It will increase the inflation rate.
But to break that, new small businesses or small businesses or other businesses can start selling that product at the same rate without profit for a few months. And once the demand gets diversified to everyone in a single market for a single product, they can improve the price slightly to get their margin. It means by thinking long-term small businesses can easily break the monopoly of any kind of big brand or billion dollars company just through a few strategies.
And when there are more sellers for the same product at the same price then the inflation rate automatically goes down.
Note: You can disagree with the inflation rate example. It’s just for example and I am not an economist or a student. But I think the inflation rate increase when the construction of capital is not diversified.
In simple words, if there are more sellers for a single product then it’s good for customers. And due to more than 1 seller, one business can’t create a monopoly and is not able to sell at a higher price to earn more profit.
6. Economic Impact of small business:
If small businesses in any market or state stops doing business for a month then it will impact tax collection, banking services, manufacturing, stock consumption, manufacturing, construction, and demands. It will negatively the tax collection, and unbalance the state’s social development activities.
But if small businesses increase their efforts a little more and attract local customers as well as outsiders, use networking, online marketing/advertising, and eCommerce, and get inspiration or motivation to grow and become a billion-dollar business then it will increase the economic activities.
As I explained in the above points that when one business starts, runs, and grows then thousands of others get the benefits of employment. All those who get employment will get money. When they get money then they will spend it in the market for clothes, shoes, electronics, savings, investments, cars, and houses. Their expenses are the income of someone. And that income is again utilized in the market.
But all these things happen when there is a demand for products and services in the market. But to create demands for consumption there are many things that need to be done:
1.) Inspiration for self-development, living standard development, and educational development by the government, teachers, and leaders in society.
2.) New facilities, services, products, and inventions in the private/government sector.
3.) Use of non-performing assets.
4.) Platforms/Opportunities for new inventors, thinkers, entrepreneurs, business owners, and startups.
5.) Use of available talents in the market instead of repairing the old workforce.
Related: How eCommerce has changed business
What are the current challenges that small business owners are facing?
- Capitalism: Only a few companies are becoming rich by selling more online and offline.
- Consumer habits and demands.
- Lack of support from society, and leaders.
Selling in zero margins to change customer habits for a particular time. By getting more stock at a low price. Use of talents skilled in selling and marketing. Selling product, A with 0 zero margins to sell product B with a little more margin. Home delivery with minimum price. (It’s tough, but not impossible). Listing the business/shop on online listing websites such as google my business. Use of YouTube to connect with the customer as a reviewer. Use of social media websites such as Facebook to update and handle customer queries. Use of online marketing. Use of eCommerce
In conclusion, I will say that as we’re growing along with technologies, our priorities are also getting changed. The Internet has changed business, technology has changed our lives. But still, the importance of small businesses and nearby shops always remains.
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