Small businesses are the backbone of most economies of the world and they have come to realize that this fact is indisputable. Any responsible government should strive to support the growth of SME’s in the best interest of the country. As a key driver of economic growth, their importance and relevance in every country of the world cannot be overemphasized.
Collected.Reviews have it that small businesses generate a very significant percentage of the gross domestic product popularly called GDP. They also create massive job opportunities thereby helping the government reduce the unemployment rate. Small businesses are encouraged to know about investment companies to enable them to make informed decisions on raising capital for their businesses.
Below are some important roles Small Business Enterprises play in an Economy.
The Economic Plan:
Small businesses have spillover effects in that they contribute to the development of national resources by involving in activities such as agriculture for the food trade, the integration of the artisanal sector for a company, and providing the day to day needs of the populace.
Downstream, they contribute to the development of the tertiary sector, in the same way, they contribute to the increase of gross national product. The creation of Small businesses particularly favors the diversification of the industrial structure, at the same time as it helps to exploit unused resources thus concealing the formation of capital.
Indeed, when the demand for a specific product is very high and could not be catered for easily, business people tend to import from other countries. Small and medium-sized enterprises, therefore, facilitate the substitution of local manufacturing for imports.
Not only are Small businesses the engines of growth and job creation at the local level but they also increasingly contribute to meeting priority challenges, particularly concerning sustainable development and the delivery of public services
Small business reduces unemployment as many people find their livelihood in doing them.
It also promotes the distribution of wealth between different layers of the population through access to labor income. Thus, small businesses are the centers for the development of the workforce and of the local entrepreneurial spirit that is essential for industrialization.
Regarding inflation, Small businesses, fight against inflation by bringing to the market essential goods and services for the benefit of the population at unbeatable prices. They can do this because the owners are often not satisfied with a minimal profit. They are also forced by the very strong competition that reigns between them, while many large companies enjoy a virtual monopoly.
Contributes To Local Government With Taxes:
When consumers patronize small businesses, they’re essentially giving a refund to their local government. A booming business will generate high levels of revenue, which in turn leads to the business paying higher taxes, including local property taxes. The taxes are then used to improve the standard of living in the local community.
Finally, Small businesses tend to attract and nurture talent who invent new products or implement new solutions for existing ideas. This results in a win-win situation for both parties as unemployment is reduced and new talent is added to the business workforce. Larger businesses also often benefit from small businesses within the same local community, as many large corporations depend on small businesses for the completion of various business projects or functions through outsourcing.