The Role Of Small Businesses In Shaping The Global Economy

The Role of Small Businesses in Shaping the Global Economy

Introduction

Small businesses are considered to be the lifeblood of the American economy, and there are good grounds for such a statement. As genus of entrepreneurial, they are the one who innovates new products, create jobs and considerably boost up the global economy. Small business statistics of today show that these businesses represent approximately 90% of all businesses in the world and offer approximately 60% of all employment. In the following article, we are going to discuss about small business from different angle within global economy, from the perspective of employment and innovation of small business within community and global market.

Job Creation

Small business is an important contributor of employment across the worldwide economy. Some of the countries generally get a relatively high percentage of new employment from small businesses. According to United States Small Business Administration, small business alone accounts for 64% of net new jobs in America. This situation is also observed in many countries where SMEs retain a significant portion of the employees of enterprises.

Employment envisioning is not limited to a purpose of making money only. The sectors, such as retail, hospitality, healthcare & technology etc., that small businesses can contribute are numerous jobs, which can contribute to community stability and growth. A study shows that local employment alleviates poverty levels, ignites an economic circle, and improves livelihood. Moreover, there is opportunity to use local people to employ in their companies, it is good for the locality to support small businesses and reciprocally the latter promotes growth of localized economy. 

Innovation and Entrepreneurship

Therefore, matters concerning entrepreneurship and innovation are well-developed in small enterprises. The small business enterprise may respond to these changes more effectively due to its size and flexibility by inventing new products and services to meet the needs of clients. Over all business owners concentrate on new ideas most of which meet needs that are unrecognized and undervalued in the market place.

Actually, it is mentioned that most of the technological innovations and innovative business strategies originate from small businesses. For instance, in the technology sector embracing altered ways of thinking and embracing innovation, new startups are often the ones who develop innovative ideas and products, albeit with small formulas, thereby impacting big corporations to either innovate or stagnate. Therefore, this tendency promotes competition, which in turn improves consumer goods and services. 

Also, there is the spirit of entrepreneurship, which implies v Venturing and Innovation entails taking risks. Competition for ideas brings people a culture of creativity as they try to implement their ideas to help grow the economy. This might also cause the advent of an entirely novel sector beneficial to the world economy and producing other employment opportunities.

Stability and Economic Growth
Small businesses are also very important in stability and economic development. Since they are outlets to generate revenues and employment, they enhance consumer expenditure which enhances the economic development. The tax receipts for small firm enhance with trade progression which enhances their capacity to contribute in provision of public goods such as infrastructure, health and education.

Plus, their monetary contribution, small firms can endure more time than giants because they are less affected by the economy problems. Operating at a larger scale, large businesses are likely to dismiss tens of thousands of employees or shut down during recession. Small business can adapt to shocks and crises and remain operating while other big businesses cannot, this is because of its low overhead and flexibility. That kind of resilience translates into positive impacts in community economic stability because it reduces instances of high unemployment rates thereby protecting the local economies during hard times.

Assisting Local Communities

Also, the small enterprises also ensure that the extent of community development and participation is high. As opposed to many large organizations that might place profitability before matters of community, small firms are often more engaged in the sectors they are in. Companies and organizations often provide donations to local charities, offer sponsorship for events and participate in community related projects that enhance the overall welfare of societies.

 Also, the partial on small companies is to contribute to the development of the region’s heritage and culture. Most of them are involved in the sale of produce, artifacts and food items which help give a community its unique character. People have an ownership mentality about their neighborhood due to the promotion of local identity to meet the needs of the society through the basis of promoting culture within the community.

Since, small businesses retain money within an economy, they enhance further spending within the economy. Current studies indicate that circulation of one dollar in a small independent business greatly circulates within the local economy assisting other businesses and services.

Challenges Faced by Small Businesses

However, there are some challenges which small firms face, which might slow their growth and sustainability. The first and the foremost among them is the question of financial inclusion because a vast number of minor businesses suffer from the lack of funds and investments. Applying for credit with classic forms of financing, owners of small businesses are regarded as high-risk trials, and they often struggle to get the financing they need to start or expand their companies. 

In addition, most of the required resources and knowledge to fully follow a very complex regulatory framework are inaccessible to SMEs. Small business managers experience pressure from numerous local, national and international rules impeding their attention to business management and growth.

Also, competition has continued to increase due to advanced technological expansion of online markets and e-commerce, which has proven that it is hard for small business to maintain their market against large and well-established businesses. Many small businesspeople do not have the cash outlay to cover the costs of digital marketing tools and website and e-commerce platforms associated with this shift toward online purchasing.

Technology's Function in Assisting Small Businesses
Small scale enterprises are likely to be experiencing competitive advantages in the competitive environment because of new technology. Therefore, a small business can increase a range of clients, improve the working process, and attract more clients in the further development of novel digital tools and applications. 

Beneficial to the small business trading companies in particular, e-commerce platforms for instance Shopify and Etsy assists businesses to remove space barriers as they get an opportunity to market their products online. Social media, which are cheap marketing tools, may be used by small businesses to interact with their customer, advertise their products and build customer loyalty.What used to be privileges of the largest organizations is now available to virtually any small business because of cloud computing. Some highlights of these technological advancements include: customer relation, delivery of financial services and management of operations. This means small enterprises are highly leveraged to be able to compete in the market adequately. 

Globalization and Exporting

Small business is a significant participant in the global economy and the international business. Thus, e-commerce isolates customers from original producers or sellers of products and services, causes global market accessibility becoming more and more possible. In this regard, the entry into foreign market offers opportunities to growth, product portfolio diversification and increased revenues.

More importantly they allow for niche product and service provision that the large firm may require such as supply chain management. These incorporations in the international networks work as a fostering ground for cooperation and creativity that is productive for small businesses as well as for the total economy.

In other hand, there might be some difficulties which the company may faced when the firm extends its operation in the foreign country. They are; cultural issues, a range of emergent restrictions and fees. These problems are solved by the tools and help that small firms receive from trade associations and government as well as industries.
Support from Policy Is Vital
It will therefore be imperative, for their full potential in shaping the global economy to be realized, to create several programs and policies to support them. This requires a climate that fosters creativity and innovation as has been focused and highlighted in the preceding discussion. In this area governments play a major role and may be able to ensure for instance that there is easy and fairly cheap availability of funds or less bureaucratic strings in case of finance or enhancing owners’ access to courses or training. Measures such as grants, tax credit and training programs which help overcome the challenges encountered by small firms are of this type. Moreover, it may improve the organizations of both business and governments as it may help them come closer so that small businesses can be made to collaborate with large companies by sharing resources and information.  

conclusion

Thus, the foundation of any analysis of the globe economy is small companies. Many believe that communities benefit from them, and they foster innovation and increases employment opportunities. For stability and the development of the local economics, it is necessary to address such requirements as resilience, flexibility, and commitment to the participation of local actors. Government, locals, and entrepreneurs should remove barriers and create a propitious environment that allows small enterprises to grow to their potential. When the globe changes small enterprise firms will be even more important as facilitators of economic exclusion, innovation and sustainable advancement. In so doing we help small firms, and as the building block of the global economy it means that the world economy can strengthen and grow, and in the process the common man is made stronger and a brighter future can be built for individuals and society.