Do you dream of starting your own business? Do you have a business plan and product line in your mind, hoping that one day you can quit your job and create your own thing?
Starting a small business is not just a dream that benefits you, it is also a step forward for your community. Small businesses benefit the local economy as a whole, even for people who are not customers or employees. Doing business locally can help your economy grow, and your entrepreneurial dreams will have a positive ripple effect.
Here are the 6 ways Small Businesses help the economy:
#1 Create job vacancies in other companies
#2 By Hiring Local Workers
#3 The money you make stays in the community
#4 You contribute to local taxation
#5 You make your city a more livable place
#6 Purchasing from a local company also means environmental protection
1. Create job vacancies in other companies
Even if you do not hire other employees and only run your own business, you can create job vacancies in other companies. You may need to re-employ the full-time job you left to start your business.
“The unemployment rate declined by 0.3 percentage points to 3.9 percent in December and the number of unemployed persons decreased by 483,000 to 6.3 million.”
Source: Bureau of labor statistics report Dec-2021
The supplier you buy and the marketing agency you work with may need to expand their team to accommodate you and other customers like you. Starting a small business means more people are fully hired, beyond your company.
2. By Hiring local workers
The most obvious benefit of starting a small business is the employment opportunities it creates. Even hiring some part-time employees can help them pay rent, pay basic expenses and maintain a reliable income.
Robin Bailey from Lontto says “Trust me when I say small businesses help mostly by hiring local workers. They hire people locally rather than going after remote workers like giant corporations and it directly impacts the local economy.”
The coronavirus has caused many talented people to lose their income due to vacations, layoffs, and salary cuts. Experts predict that the unemployment rate will be close to the 25% unemployment rate during the Great Depression.
By starting a business, you can help reduce local unemployment rates and provide much-needed financial stability to the locals. In addition, hiring others will reduce reliance on state programs (such as unemployment benefits or food stamps), allowing your government to help others.
3. The money you make stays in the community
When large chains like Starbucks, Wal-Mart, or Uber Eats open in the community, some of the profits leave the city (possibly the country) and contribute to corporate profits.
Although local residents can certainly earn wages by working for these companies, most of the money does not stay in the area. Consider Uber Eats, which usually charges 30% on most restaurant orders.
According to Morshed Alam from Savvy Programmer “A small business contributes to the local economy in a variety of ways. Most importantly, a small business provides jobs and income for local residents. In addition, small businesses often buy goods and services from other local businesses, which helps to support the local economy.”
Some of this money is used to pay drivers; salaries, but most of it goes to Uber shareholders. However, if a local company hires some drivers and develops its own delivery policy, it can provide customers with the same service while keeping 100% of its profits locally.
The money earned from your small business will be returned to the community. It is used to support local restaurants, empower regional farmers, and donate to small non-profit organizations. When spending locally, your dollar can be spread more because it will accumulate among partners, suppliers, and employees.
4. You contribute to local taxation
When your customers spend money on your business, unlike large companies, they invest in their communities through income tax and sales tax.
The taxes you pay will be used to support local schools, help improve roads, allow cities to create parks and other community areas, and fund social service projects.
Small businesses of all types pay an estimated average effective tax rate of 19.8 percent.
State and local tax revenues account for approximately 9% of GDP and therefore have a significant impact on your local government budget.
5. You make your city a more livable place.
Local businesses are the lifeblood of the community. Dentists keep teeth white and people keep smiling. The restaurant owner makes the residents happy and fulfilling. These small businesses not only provide goods and services but are also part of the ecosystem of your city.
Small businesses make communities interesting. They are what attracts people to live there. Your business and other businesses in a similar area will bring more residents to your city, attract more tourists (and the money they spend on holidays), and encourage large-scale job creators to relocate to the area.
6. Purchasing from a local company also mean environmental protection
Small businesses are becoming much greener day by day. They are creating a huge difference in the environment.
Almost more than 53.42% of employees in the United States work for companies with less than 500 employees
Shipments from foreign countries or the United States have a significant carbon footprint. If you can purchase goods locally and customers can buy goods from your small business, then you and your customers can reduce your carbon footprint.
You can reduce emissions, make the environment healthier, and the air cleaner. Everyone benefits from local businesses in your area, from the children who enjoy the fresh air of the park provided by taxes, to the employees who rely on you to pay their salaries.
In conclusion, When you start planning for a small business, consider these benefits. If you decide to take the next step and start a business, consider getting a small business loan to help you get started.