When it comes to the world of business, entrepreneurs and entrepreneurship, the average person would probably believe that major companies are more of the backbone of American economy than smaller companies. Which would not necessarily be true. Upon further research, we will find that that is quite the opposite.
Small Business
Small businesses contribute locally to the economy by bringing growth and innovation to the community in which the business is established or based. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable or employed by larger corporations.
In essence, the small businesses can be looked upon as the lifeblood of the US economy. According to the site Kron.com, small businesses can create close to 2/3 of new jobs and drive US innovation and competitiveness over the same. The number of small businesses has grown by about 25% or 1.4% annually.
According to the site, Advocacysba.gov small businesses generate 44% of US economic activity.
There are 30.7 million small businesses in the United States which account for 99.9% of all US businesses (SBA) 2019 the Small Business Administration defines a small business as a firm which has fewer than 500 employees.
Two examples of how small businesses contribute to the economy:
- Small businesses create jobs that spark innovation.
- Small businesses provide opportunities for many people including women and minorities to achieve financial success and independence.
Here are four reasons why small businesses have an advantage over large corporations
Flexibility
The small business can be more malleable than larger corporations due to less financial restrictions such as corporate sponsorship etc.
Communication
The small businesses are more “personal”. There is a greater chance you can speak to a manager of a small business quicker than you will with a larger corporation.
Job Security
Larger corporations tend to have more of an assembly line, next person up mentality than the small businesses. In small businesses, often you are part of a “family” atmosphere, where loyalty and dedication are major components.
Customer Relationships
The small businesses are normally more community oriented than larger corporations. In the end, both the larger corporations and small businesses are equally important to the economy in their respective standings. But the small businesses have always and will continue to be the backbone of US economy.
Large Corporation
Large Corporations are important to the overall economy because they tend to have more financial resources than small firms to conduct research and develop new goods. They generally are for more potential job opportunities and greater job stability, higher wages, better health and retirement benefits. Job stability is debatable topic. I listed earlier that small businesses offer more job security
There can be a negative to large corporations in regard to the economy. Large businesses generally provide high paying jobs and generate tax revenues for different levels of the government, however some of them may become ”too big to fail,“ meaning that the failure of any one of them can cause widespread economic issues and governments often provide bailouts which could lead to deficits. We have witnessed this take place during the recent pandemic, which caused quite a bit of controversy.
The Large corporation post Civil War was the backbone of a newer, burgeoning US economy. There were many goods and services, which at that time, was severely needed. The major issue with large corporations is the possibility of monopolization, which drives smaller businesses away. This causes an absence of competition, which can lead to higher costs for consumers, lower quality products and corrupt financial behavior.
Three examples of how Large Corporations contribute to the economy:
- Large Corporations can conduct research on a large scale enabling them to provide solutions to an issue or a need promptly.
- Large Corporations create more career opportunities and offer higher paying positions and benefits that are usually beneficial for the employee and their family.
- Large Corporations have the ability to donate funds on a larger scale, this is also known as mandatory CSR. Corporate Social Responsibility contributes to community needs in a philanthropic, activist, or charitable nature.
Here are four reasons why large corporations have an advantage over small businesses
Faster Service
Large corporations normally have more employees, which enables the company to divide tasks accordingly and get service completed at a faster pace.
Return Policies
Large corporations have better insurance that enables them to offer better return policies. Large corporations offer their customers longer periods of time to return an item, normally 14-90 days, and many products can be returned if opened.
Grant Opportunities
Corporations have the capability to offer grants to local organizations, in large amounts. These grants are usually offered to provide a solution to need within the surrounding neighborhood.
Written By David K. Bradley @dbrad_theshow
Edited by Hasina @Hasinaglobal
