Why are small businesses important?
The sudden arrival of the Covid-19 pandemic resulted in a massive economic downturn, with millions across the globe finding themselves without a job overnight. According to the Business & Human Rights Resource Centre, some 3 million South Africans lost their jobs during the pandemic, impacting an already struggling economy. However, one positive came out of this: those considering an entrepreneurial path were given the push they needed to register a new business.
The New York Times reports that data from the American Census Bureau noted a 24% increase in start-ups from the year before – with around 4.3 million new businesses emerging. People are taking the necessary risks and finding that rewards are very much worthwhile. And not just for them but for the local and global economy. Here’s why small businesses are so important.
1. Job creation for local workers
When you start up a business, you might be providing employment for yourself at first. Eventually, thought, this will result in job creation for others. Even businesses that tend to retain a small size will require assistance in the form of cleaning, administrative, accounting and consulting services along the way – all of it job creation.
And for those with greater ambitions, starting a new business can eventually result in creating a global corporation and hiring thousands of employees worldwide. A pre-pandemic report by BusinessTech indicated that new businesses created 28% of all jobs in the last four years (2014 to 2018), with 86% of these jobs created by fast-growing businesses. As it stands, job creation is falling on the shoulders of the private sector, and this begins with small businesses.
Big businesses and government entities are largely restricted by red tape and responsibilities to stakeholders and investors. This means that when new opportunities come along or there is a shifting economic climate, larger organisations tend to move a lot slower to adapt to this change. If you’re not convinced, look at the South African power utility Eskom still limping along with its outdated coal-power plants, where the private sector has embraced renewable power and the opportunities this presents.
Smaller businesses are run by entrepreneurs. They are more likely to be looking for new opportunities for investment, with more flexibility in shifting the way things are done. There’s no ‘this is how it’s always been done’ mindset; if there’s a better way to do things, they’re more adaptable and able to do this. This is better for business and better for the economy. Especially when we consider that the private sector is being primed to effectively provide the country’s power generation.
Another interesting trend that emerged with post-pandemic start-ups is that they weren’t all necessitated by the pandemic. Rather, they were ideas that had been simmering for some time. People had been brewing these notions and were finally presented with the chance to unleash them on the world. It’s this sort of innovation that drives the economy. Undoubtedly it was a new idea or concept that provided the foundation for most large corporations. We’ve seen, though, how so many big companies have failed through a lack of innovation. Nokia and Kodak were leaders in their field at one time, but without innovation, they were quickly overtaken.
Why Are Small Businesses Important?
Small business is not just beneficial for the economy but also for those running and employed by the businesses. Here are some of the key benefits for those who want to get started.
Be your own boss
This is the big one. No more answering to a superior you dislike or performing menial tasks that add no value to your job. You’re able to decide what to do and when to do it. This is by no means indicating that running a business is simple. Quite the opposite. But the decisions you make and the work you do is not for someone else’s pocket. It’s for your own – or those of your grateful employees.
Focus on your passion
Even if you’re working in a field you enjoy, you’re not necessarily doing the work you’d choose to, given the chance. When you start a small business, you’re able to pursue your passion during your day job, rather than just getting a taste of it or restricting it to an after-hours hobby.
Increase your earning potential
When working for an organisation, your income is mostly limited to what the company is willing to pay. And during a downturn in the economy, you might have to put up with pay cuts and other cost-cutting measures that impact your lifestyle. You will be responsible for the business expenses when you work for yourself. But the more you work, the more you get.
Become a niche expert
By starting a small business, you’re also setting yourself up to become an industry expert in a specific field. Whether it’s marketing, IT, catering – whatever – you will know the industry inside and out, allowing you to set yourself apart from competitors.
What to remember when running a small business
Have you been sitting on the fence about starting your own business? Hopefully, you’re now leaning towards taking the risk and earning the rewards. Remember that there are various aspects to starting any small business that you will need to address. These include:
- Registering your business;
- Monitoring your accounts;
- Monitoring your inventory; and
- Ensuring tax compliance.
Fortunately, there is business software that can assist you with most of the daily administrative and financial aspects of running a company. (So that you’re not overwhelmed.) Omni Accounts can provide you with ERP (enterprise resource planning) software with customisable features that assist with stock control, accounts management, as well as point of sale software for those retail start-ups.
Make starting your business as simple as possible by working with the best software from the start!