Do Small Businesses Drive The Economy?

Small businesses play a key role in the economy and contribute to the creation of jobs and wealth within society. However, in recent years the economic climate has been difficult as customers reduce spending, costs rise and banks restrict lending to individuals and businesses.

Small businesses are active in markets and countries around the world and provide jobs for many millions of people. Within the 27 countries of the European Union, small businesses make up 99% of all businesses and are responsible for employing 67% of workers.

Small businesses for the purposes of definition include micro-businesses that employee between one and 10 people and small-businesses that employ between 10 and 49 people.

In the UK, the number of private businesses has been increasing since 2000 with growth in the number of micro-businesses accounting for the biggest increase.

Such growth is reflective of lifestyle choices as people chose to be their own boss and work for themselves in an economy where it is becoming difficult to find a secure job.

Small businesses because of their size tend not to be as efficient or productive per employee as large firms but, nevertheless, employ large numbers of people.

Even though small businesses are active in all markets they make a particular contribution to employment in rural areas when compared to large businesses.

During difficult times they provide employment in all sectors of the economy and in times of growth play a key role in providing products and services as part of the supply chain to large companies.

Small businesses have been hit particularly hard by a lack of finance, increase in charges and reduction and withdrawal of banking facilities.
Governments recognise the importance of small businesses and have introduced support measures although more can be done to reduce the cost of doing business as it is a constant concern.

Small businesses can do more too, not least in relation to exports, as many businesses focus on local markets and as the challenge of exporting is seen as problematic and costly.

SO, small businesses play a key role in driving the economy; they always have done and always will. All we need to do is recognise their contribution and support them in whatever way we can.