The Importance of Small Businesses: Will Small Businesses Ever Rule the World?
Economists around the world theorize that small businesses and start-ups are one of the most important factors for economic growth. But why? Let’s get into it and see why small businesses are important and will they ever rule the world?
Job Opportunities in Rural Area
Let’s start with one of the most important functions of small business - creating job opportunities for people. While big companies dominate the stock market, small businesses drive economic growth by creating job opportunities in rural areas. According to the Small Business Administration and U.S Census Bureau, small businesses have created 66% of new jobs since the 1970s.
The Center for Innovation focuses on supporting small businesses by helping them in the developmental stages driving economic growth in Southwest Colorado and the Four Corners region.
Competition
Small businesses and start-ups help to bring some competition into the business world. Take for example a farmers market. A lot of people would prefer to go to the farmer market instead of the big grocery store. They get more value, better organic produce and the prices are usually cheaper. Additionally, customers will know that the products are produced more ethically than something you would buy from a big company.
Another side to it is innovation. Small start-ups will be able to implement the innovations faster rather than a big corporation as they don’t need to change the way the whole company works.
Representing the diversity of the country
As of 2012, 14.6 percent of small business owners were minorities, compared with 11.5 percent in 2007. This includes 2.3 million Hispanic-American-owned businesses, 1.9 million African-American-owned businesses, and 1.6 million Asian-owned businesses. Additionally, 36% of small businesses are owned by women.
Diversity in the business space helps to bring more perspectives, ideas, and views on the world which drives success of the company. Diversity and inclusion are important components of any successful business and small businesses play a huge role in showing it to the business world.
Will small businesses ever rule the world?
Right now there are 28.8 million small businesses in the United States. It is a big number but will small businesses ever rule the world? A big movement around small businesses helped people to see a different side of big corporations and to understand why it is important to support small businesses. People saw how unethical big corporations can be and how much damage they make. Big retail companies like Amazon are taking over and making it very hard for small businesses to survive.
Most companies will never be cheaper or as fast as Amazon. It is something that is almost impossible to achieve for small businesses that don’t rely on millions of workers when producing their goods.
However, Amazon still tries to include small businesses by offering their fulfilment and their platforms. For example, Amazon Handmade, a marketplace for artisans to sell goods that are entirely made by hand, threatens to push marketplaces that crafters have long relied on (i.e., Etsy) out of the space. While Amazon gives these sellers a larger audience, they also charge significantly higher fees — a 15% commission fee as compared to Etsy’s 5%. Another issue will be different resellers pushing their cheaper products on Amazon.
There are lots of obstacles in this world for small businesses. Fortunately, small businesses have something that big companies can’t do. They can adapt and adjust their business much quicker than big corporations can. Moreover, small businesses offer more personalized customer experience and win over big companies that way. They might not rule the world but will continue to incorporate with bigger companies and contributing to the economy of the country.
We Are Here to Help!
While small businesses might not take over completely, we believe they will keep being an important part of today’s economy. The Center for Innovation offers multiple resources to help you and your small business to change the world.