In this article, I will answer the question: How do small businesses contribute to the economy?
There are many ways in which small businesses contribute to the economy. Many people have a misconception that only large corporations contribute significantly. However, small businesses also make up a large part of our economy and even employ more people than larger companies.
Let’s take a closer look at how small businesses contribute to a countries economy:
How do Small Businesses Contribute to The Economy?
1. Employ locals
Small businesses create local jobs and offer the opportunity for higher wages. For example, a small business may need someone to work in their shop and can’t afford to hire anyone from overseas because it requires knowledge of the area.
Instead, the owner will seek someone who can provide that kind of knowledge and settle with hiring local people instead of people from other countries or places.
2. Keep money in the economy
When a small business owner hires someone locally rather than an immigrant worker, they keep their money within the local economy and do not send it overseas. This enables more spending and contributes to revenue for businesses around them.
A common misconception is that small business owners are greedy and only care about making money. This is not true in most cases; they want to contribute to their community, employing local people to help build the economy.
3. Offer goods/services that are unique or are needed locally
Small businesses can find it challenging to compete with giant corporations with global resources at their disposal.
However, a local business may have something unique to offer that a larger company might not do so. This allows for a more competitive advantage and can contribute enormously towards the economy in their immediate community or region.
4. Contributes to Local Taxes
When a business is local, then it will contribute towards the local tax base. This means that the country is getting money from its citizens and not relying on global factors beyond their control.
A small business owner has a strong interest in giving back to their community and knowing where their money is going and how it helps others. Therefore, small business owners contribute to the taxes that are used to help their citizens.
5. Brings Products and Services Closer to People
It is the small businesses that empower the people to get the things they need with ease. For example, if you want something, you can head down to your local shop and purchase it there, most likely within walking distance of where you live or work.
Small businesses are easier to access than larger companies because they are closer, which is often more convenient for many people. This ensures satisfaction for customers and encourages repeat business.