Small business is a platform for a community to link various aspects such as buying and selling which is emotionally rooted within local communities where preference is given to friends and neighbors. It also provides employment opportunities for new innovative talent which does not fit in the larger corporations. Therefore, small businesses directly help to stimulate economic growth of a country. By providing new employment opportunities, it serves as a building block for larger corporations of a country. Small business also helps larger business or corporations to operate and grow their operations as they depend on small businesses for various outsourcing example HR operations, security etc. It also provides raw materials to larger manufacturing corporations.
Relevance of Small businesses
Small businesses though work on lesser capital as compared to large or regular sized units, they hold significance, which is described under the following heads:
â€¢ Employment to local workers Small business tends to create a platform, which provides opportunities for people who possess innovative skills to create new and unique products and make innovations in existing products in which the small business is dealing with. In addition, these firms have been very beneficial in providing opportunities to the work force, which is not highly skilled and is often not welcomed by large organisations. Small firms utilise such work force, which gradually enhance their skills over time.
â€¢ Tax contribution to local government When people buy things or use services from local or small businesses in their community, they contribute to government taxes indirectly from which the government build schools, fire departments, and caters facilities for local police. Small business also contributes through property tax, sale tax to the governments that helps to complete projects such as lightning and other sidewalk projects.
â€¢ Back bone to large corporations There are numerous ways where the small businesses support large corporations. There are many components that are required by big manufacturing companies for the completion of their products, for example, a car manufacturing company XYZ has to take lot of spare parts. These spare parts are often supplied from small businesses. Sometimes, large companies hire small organisations for outsourcing some of their operations such as accounting, human resource, legal and insurance. Small businesses are often hired by large firms for special projects or certain business operations. For example, a large unit XYZ for handling its billing or their software operations, website operations and upgradation, etc. hires a small organisation PQR.
Implications of small businesses developing into large units
There are numerous examples of companies that started with a small base but with vigorous efforts and efficient business strategies, gradually ranked amongst the top working units. Such firms had a dual effect on the economy, at the micro scale, they contributed to develop the indigenous economy and at the macro scale, they opened ventures to a successful economy at the global level. For example, a firm X grows from a small unit into a large business spreads worldwide keeping its headquarters at same locations. This situation would have a two-fold impact:
â€¢ Generation of employment: Such units provide employment opportunities in the local community. More work at a larger scale is intrinsic to employment and growth. â€¢ Extend opportunities to small-scale business: Other small firms of the local community receive work opportunities from the bigger firms, that once also started at a smaller scale.
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