Small business and startup – why considered important?

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Small business and startup – why considered important?

Small business and startup why considered important

Small businesses and startups (in this article both incorporated the mention of being a small business) have an important role in society. When it was first established, a small business represented the way business owners tested a business idea on the market. Businesses that survive provide economic stability for the owners and their families.

Small businesses that create employment opportunities for either the workers or business owners make the economy more stable. Providing a stable income source for business owners and employees is only one reason why small businesses are considered important. Here we describe several other reasons.

Small business has the potential to expand

Small businesses give consumers a lot of choices about where they will buy goods in retail. The retail market has more opportunities to develop. Retail businesses are very likely to be bigger, which has the potential to develop into national or international operations. Consumers can buy goods such as clothing in small-sized corporations to large companies.

Productivity in science and machinery

Small businesses can be more productive than large-scale companies. Small companies employ 32 percent of scientists and engineers, while a larger company employs these two professions of 27 percent.

Professionals in small businesses produce more patents than their colleagues in large companies. Scientists and engineers need to be aware of this option when working, including when they examine new ways to provide solutions to technical problems in the community.


Innovation is very important in small businesses. In small-scale companies, employees usually work close to consumers and immediately know their needs. In addition, small businesses usually have a small level of management, which separates the work line of business owners. Employees can build companies to continue to grow by sharing ideas that are beneficial for consumers.

As for business owners, they only need to pass a little bureaucracy to apply the idea of ​​employees. This fact causes why some innovative workers prefer to work in small businesses.

Benefits of Small Business for Local People

In addition to creating new jobs, this type of business also provides benefits to local communities. Here are some of the positive effects of small business locally:

Local involvement

Small business owners are an integral part of the community where they live and work. Therefore, they realize how their decisions have an impact on their environment. In addition, local owners tend to be involved in the community.

For example, they become sponsors for certain events, contribute to donations in the Wisma Tuna shelter, or participate in the charity community.

Community Health

In addition to contributing to the unique identity of the local community and locally involved, small business owners help build community awareness. Businessmen usually build relationships with customers and get to know the names of many customers.

Many small business owners form formal or causal relations, such as trade associations. When traffic to one business is increasing, businesses nearby can benefit through increased exposure or reference.

Basic tax increase

When residents shopping in small businesses in their community, taxes remain in the local economy, which as a result help improve the community. Likewise, small businesses contribute to their environment by channeling more advantages to their community.

Local work

Small business is the creator of job fields and most types of work are local. Instead of having to go home to another city, workers prefer to work in a location closer to the house. This not only reduces traffic congestion but also supports community members working in local businesses.


Small business is the result of entrepreneurial enthusiasm from business owners. By starting, business owners are responsible for their future. Entrepreneurship is like fuel for economic innovation and prosperity and has become a key tool to get out of work with low salaries to the middle class.

Innovation and competition

Like other businesses, to be able to survive a small business need to be “look” in the crowd. Businesses must serve logical needs in the community and do it better than competitors. All related must also be unique, innovative, better in producing healthy marketplaces, and consumers well served.

Little infrastructure and low maintenance

Compared to shopping malls, local stores tend to need less public services and infrastructure. Although the owner of a new music store requires a business license and ownership permit, the process of opening a new store does not give the same demands for the city planning department compared to building a new supermarket.

Small businesses can survive and prosper in the environment for several reasons:

  • Develop personal relationships. Small businesses have good placements to build personal relationships with customers, employees, and suppliers. Running it makes you know who you are handling. You can face directly with people in your contacts. People’s interaction per person is very important in building strong relations.
  • Flexible responses to problems and challenges. Here there are only a few instruction hierarchies. Big businesses regulate how to operate and existing procedures are difficult to change. Small businesses are often far more flexible. A decision can be made in a fast time.
  • Inventiveness and innovation. Small businesses in a good position to introduce and develop new ideas. This is because the owner does not need to report or seek approval from anyone. For example, when Anita Roddick founded the Body Shop, he developed a variety of environmentally friendly cosmetics in very simple packaging. This is not common in conventional cosmetic companies.
  • Low spending. Because of its small-scale operations, small businesses have lower expenditure costs, operate in small areas with cooling and electrical costs, and small rentals. Low expenses cause lower prices to consumers.
  • Serving a limited market. Large companies with high expenses must produce high-level results to spread prices. God, small companies can produce a profit with lower sales figures. Therefore small businesses can sell produced goods in smaller markets. For example, local window cleaning services only serve several hundred houses and jewelry specialists with personal clients.
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The main reason many people choose to establish a small business is independence. They also got a reward for themselves. These two things become strong drivers.

Small business and local economy

Although it does not make money as much as large companies, small businesses become important components and the main contributors to strengthen the local economy.


Small businesses are defined as businesses or corporations with employees of less than 50 people. In the United States, since 1995, small businesses have produced 64 percent of new jobs, and pay 44 percent of the total American private salaries.

Economic growth

Small businesses contribute to the local economy by bringing growth and innovation to the community where businesses are built. This business also helps stimulate economic growth by providing employment opportunities to people who are not employed by large companies.

Small businesses tend to attract workers who innovate by finding new products or implementing solutions for existing ideas. Large-scale businesses also often benefit in the same local community, such as many large companies depending on small businesses to complement various business functions through outsourcing.

The ability to adapt to economic climate change

Many small businesses can respond and adapt quickly to economic climate change. This is because this business is often very customer-oriented. Many local customers remain loyal to their favorite stores amid the economic crisis. This loyalty means that business can last during difficult times, which can then strengthen the local economy.

Contributions to schools and local governments

When consumers subscribe to small local businesses, they give money back to their local community. Local businesses will generate high income, which means the business will pay a greater tax, including local taxes. This money is then used for community needs such as the department of police and schools.

Future growth

Small business doesn’t always stay small. Large companies like Nike, starting from small businesses that grow into big players in national and international markets. Many computer industry leaders start by working assembling machines with their own hands in their home garage. Microsoft is the main example of how small ideas can change the world.

Small businesses that grow into big businesses often remain in the community where businesses are first built. Having a large company based in the community can be further helped provide work and stimulate the local economy.

Advantages and disadvantages of small businesses

Small businesses are usually owned personally, with limited stock volume, and a small workforce. Business can be built with cooperation or owned by one person. When starting, you need to consider the advantages and disadvantages.

One advantage of small businesses is the relatively low capital needed. Personal savings or small loans from friends and family are usually enough to start. Funds for businesses can be assisted by the government, banks, or microfinance institutions if you provide a decent business plan.

After gaining capital, it will be very wise if you memorize the pros and cons of a small business to help you get ready to face the challenge.

Small businesses are easier to arrange than large companies. This is because of its local and small-scale nature. Owners can store copies of transactions or invest in cheap software to store data. Save inventory, flow, and fund transactions are easily arranged. But you should hire a trusted accountant for an effective and organized financial data system.

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Perhaps the most obvious feature when determining the profits and loss of small businesses is the structure of ownership. Most small businesses are owned by one person or several partners. Therefore, decisions can be made and implemented faster.

Because this is a personal investment, most decisions are made based on interest. Profit merely the owner’s policy. Clients also enjoy more personal customer service because there are only a few employees and most transactions are carried out directly.

Another factor that needs to be considered for the pros and cons of small businesses is the level of exposure. Small business is not the policy. Many clients choose to do business with large companies than small ones because they are considered risky.

The simple process start a small business

Great little businesses always start from an idea, but you have to change the idea of ​​being an actor. It can be understood when confusion appears about the various things needed to start a business, but run it will be easier than thinking about it.

A big goal, if you break it into a small part of Lebh, you can take the action needed to start. Here’s a simple process to start your own small business.

Write your business plan

The key to the success of a small business, especially in the startup phase, is making everything simple and low costs. Costs don’t only mean money but also time. For starters, make a business plan that you will start.

  • Define your vision. What will be the result of the end of your business?
  • Define your mission. Unlike the vision, the mission must explain the reason for the existence of your company.
  • Explain your goals. What will you do, what are your goals, which will encourage your mission and vision achievement?
  • Basic strategy framework. How will you achieve the goals that you have made?
  • Create a simple action plan. Make a point containing the action needed to achieve the goals you write.

Determine the budget

Even though you are advised to keep the cost as low as possible, you still need to determine the budget to start a business and how much you can spend. When you use your funds, realistically about the amount and whatever you anticipate. Adding 20 percent for incidental things to be realistic amounts that help you plan a burn rate.

Burn Rate is how much money you spend every month. It is important for you to know and determine how long you can be on business before getting a profit. You need to organize a business with a profit of 30 to 90 days. If possible, have a backup budget so you can survive if all things don’t go as expected.

Legal entity

You will spend a sum of money to take care of the document to start a business. You need a fee to have a license or another. Perform research first to find out the bureaucratic costs before starting a business.


Whatever type of business you decide, separate business funds from personal accounts. It’s easy to make a business account at your local bank. All you need to do just fill out forms, license information, and initial deposits for most institutions.

Don’t first submit any credit, just separate your business money from a personal account. It takes no more than 1 hour in the financial institution you choose.

Have a website

Both your conventional or online business, you need a website and that means having a URL. When you start an online business, you can choose a domain for online shopping trains with low monthly prices, or you can build your basic website.

Sales test

Now you have a foundation to start a small business and you can start testing some sales. Try spreading the news about yourself cheaply and creatively.

When you run a business service, involve yourself in the Commercial Group and find out the existing source so you can talk, present, or share information about your business. If your business is product-based, your product viability tests at local meetings or community events to test what is a public opinion about you and your product. Note Traffic to your website through Facebook Ads or Create a simple Google Adword account to find out whether traffic comes to your site.

You can follow all the steps above yourself without coming out with a lot of money. This is a good way to test the viability of your small business before allocating all the time and money to an unproven idea.