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How Small Businesses Affect a Nation’s Economy

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Gone are the days when small business owners were individuals lacking formal education or corporate skills. Due to the advent of the Internet and social media, social status or level of education are no longer the defining criteria for achieving success in entrepreneurship.


Because of that, small businesses have become a really important part of national economies in recent times. This trend is now observable in a number of developed and developing countries. SBEs (small business enterprises) contribute to half of the total GDP in such developed countries as Japan and the USA. This gives one a pretty good idea of how essential SBEs are to the continual growth of any economy. However, in some countries, small businesses are oftentimes underrepresented, and it's high time that changed.

To better understand the role SBEs play, we should first consider some basic economic concepts.

What is a Small Business Enterprise (SBE)?

There isn't a universally accepted definition of small business enterprises. In the United States, SBEs are referred to as commercial entities that employ a staff of 500 and have little influence on the market segment they operate in. In their turn, Europeans define them as having fewer than 250 people.

What is an economy?

An economy can be defined as a system of buying, selling, and producing goods and services. The most basic component of any economy is the distribution of money, or putting it simply, buying and selling. There are many interdependent factors that influence economic growth or decline of a nation, such as labor, law, infrastructure, natural resources, human capital, and technology. For the purpose of this article, we will focus on small business enterprises and their influence on a national economy. There are numerous ways in which SME ensure collective growth of an economy but we'll focus on these four:

  • It serves as a source of employment.
  • It helps reduce poverty.
  • It alleviates tax burden on small business owners.
  • It reduces crime.

Employment

Due to the abundance of information on social media, it has become relatively easy for literally anyone today to start a small business. All it takes is having some start-up capital and Internet access. However, small business owners need to employ people to ensure their company's growth. Because of the small initial costs involved, people are constantly looking for ways to launch their own SBEs. Examples of such small enterprises include companies hiring custom writers for people who can buy cheap essay, Wieners Circle, Death wish Coffee, etc.

One form of trading that has become very instrumental in facilitating the creation of small businesses is e-commerce (online shopping). E-commerce makes it possible to start a profitable business with no infrastructure at all, and that means little start-up costs. Small business enterprises serve as an excellent alternative source of employment, especially when it comes to jobs that don't require graduate level education. And this, in turn, translates to increased economic growth and development.

Poverty

Poverty is undeniably one of the main reasons for economic stagnation. Poverty and unemployment go hand in hand, which means that the former can be eradicated by providing more job opportunities. And the best way to do that is to encourage the creation of SBEs at the community level. Given the low start-up costs involved, it's safe to say that an economy that invests in SBEs is sure to experience exponential growth within the shortest possible time.

Crime Drop

A spike in crime rate is undeniably another anti-economic growth indicator. That's because it imposes a huge economic burden on the affected communities and taxpayers. And the worst thing is that investors make it a rule to avoid crime-ridden areas.

So what can be done to improve a country's economy if it is filled with crime-ridden communities? To tackle a problem of this magnitude, we've got to first understand its underlying cause, which is joblessness. In fact, it doesn't take a rocket scientist to figure that out. If that's the case, then creating SBEs seems to be the logical thing to do. In other words, by creating jobs in these communities, you provide people with an opportunity to make an honest living and give a boost to your economy.

Taxes

Tax payment is one of the major channels through which governments get revenue. As of 2010, small businesses accounted for 50% of the total GDP (Gross Domestic Product) in the United States, one of the strongest economies on the planet. This means that half of the foundation of one of the world's biggest economy is based on the input of SBEs. And as we all know, the ratio of tax revenue to GDP is directly proportional. In other words, tax revenue increases as GDP increases. So, not only do small businesses affect GDP but they also directly affect tax revenue. Given that, a rapid decline in output of SBEs will automatically cause a rapid decline in economic growth.

Because of the small start-up costs involved, SMEs are relatively easy to create and run. That is exactly the reason why more and more of them are started on a regular basis in developed and developing countries. This fact alone underscores the grave importance of small businesses. Their growing number means more employment opportunities which, in turn, translates to increased tax revenue and GDP.

Now that you know the role small businesses play in a nation's economy, it should be pretty clear to you that they ensure global financial stability. And this further reinforces the belief that we all have significant roles to play in nation building, no matter how small they may be.

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2020 is Around the Corner: Here's How To Design Your Next Decade

Personally, I am over the top excited that we are on the cusp of turning the page on not only a new year but also on a new 10-year window of opportunities and possibilities!

You may be thinking, whoa…I am just embracing the fall season…yikes… it is tough to think about a new decade!


Yet it is this groundwork, this forward thought that you put in place TODAY that will propel you and lead you into greatness in 2020 and beyond. Designing a new decade rests in your ability to vision, in your willingness to be curious, in your awareness of where you are now and what you most want to curate. Essentially, curating what's next is about tapping into today with confidence, conviction, and decision. Leading YOU starts now. This is your new next. It is your choice.

Sometimes to get to that 'next', you need to take a step back to reflect. Please pardon my asking you to spend time in yesterday. Those who know me personally, know that I created and continue to grow my business based on enabling the present moment as a springboard for living your legacy. So, indulge me here! True, I am asking you to peek into the past, yet it is only in order for you to bring the essence of that past forward into this moment called NOW.

One of the best ways to tap into what's next is to clarify what drives you. To design a new decade, ask yourself this question about the past ten years:

What worked? What were my successes?

Make a list of your achievements big and small. Don't type them, but rather use ink and paper and sit with and savor them. Move your thoughts and your successes from your head, to your heart, to your pen, to the paper. Remember that on the flip side of goals not attained and New Year's resolutions abandoned, there was more than likely some traction and action that moved you forward, even if the end result was not what you expected. Once you have a full list of a decade's worth of personal and professional accomplishments, think about how this makes you feel. Do you remember celebrating all of them? My guess is no. So, celebrate them now. Give them new life by validating them. Circle the successes that resonate with you most right now. Where can you lean into those accomplishments as you power into the decade ahead?

Now comes a tougher question, one that I used myself in my own mid-life reinvention and a question I adore because in a moment's time it provides you with a quick reconnect to your unique inner voice.

If it were 10 years ago and nothing were standing in your way, no fear or excuses to contend with…what would you do?

Don't overthink it. The brilliance of this question is that it refocuses purpose. Whatever first came to mind when you answered this for yourself is at its core a powerful insight into defining and redefining the FUTURE decade. Bring your answer into the light of today and what small piece of it is actionable NOW? Where is this resonating and aligning with a 2019 version of yourself?

Then, based on your success list and your answer to the above question, what is your 2020 vision for your business and for the business of YOU?

Designing a new decade begins as a collection of 3,650 opportunities. 3,650 blank slates of new days ahead in which to pivot and propel yourself forward. Every single one of those days is a window into your legacy. An invitation to be, create, explore, and chip away at this thing we call life. One 24-hour segment at a time.

While you have a decade ahead to work on design improvements, you have the ability to begin manifesting this project of YOU Version 2020 right NOW. Based on exploring the exercises in this post, begin executing your vision. Ask questions. Be present. Let go of 2019 and the past 10 years so that you can embrace the next 10. Position acceptance and self-trust at the forefront of how you lead you. One choice at a time.

Don't get bogged down in the concept of the next 10 years. Instead position clarity and intention into each new day, starting today. Then chase every one of those intentions with an in-the-moment commitment and solution toward living a legendary life!