4 Reasons Why Entrepreneurs Are the Backbone of the Economy
Although becoming an entrepreneur is not for everyone, it is the most needed element of any economy, whether it’s a recession or things are really thriving. You just can’t have enough visionaries that were bold enough to take the risk to strike out on his or her own because they wanted more control of their lives and they were committed to creating value to the rest of the world. I have 4 reasons why I believe that small business owners are the backbone to the economy.
First of all, they are constantly creating jobs for those that want one. When you’re the boss, you’re not only looking out for the well being of your family but the well being of your employees which is very, very rewarding to say the least. Especially with the state of the economy right now, it’s needed now more than ever.
Secondly, the value that is created for the end user by using their products or services is beyond comprehension. If you were to remove every entrepreneur from your city, the city would collapse overnight. That’s why instead of us giving them a hard time, we need to appreciate what they’re doing from time to time. Yes they’re making a living but attached to that income is a mountain of responsibility that the public doesn’t see.
Thirdly, these local super heroes are creating products and services that has made what used to be a headache more convenient, easier to use, and much improved. for those that hate cutting grass, washing their cars, can’t cook (or don’t like to), or in some cases just lazy, there’s a business in your city that happily does it for you ( for a fee of course) or a product that makes it easier to do.
Fourth, they are actually doing what the free enterprise was designed for in the first place. They decided they wanted more from life, created a vision and proceeded to chase after the American Dream. In spite of the difficulties that come with being the boss at times, it’s rewarding none the less. Also, unlike a job, a business can be passed on from generation to generation.
My hope is that someone that’s already an entrepreneur or is aspiring to be one will recognize that you’re making a difference in the lives of countless people locally and globally and you deserve a round of applause. If possible print this and keep it as a constant reminder of your value to this world.
Entrepreneurs
Entrepreneurs are individuals who start and operate their own businesses, taking on financial risks in order to pursue opportunities and create value. They are driven by a combination of innovation, ambition, and a desire to solve problems or meet needs in the market.
Entrepreneurs play a vital role in the economy by creating new jobs, introducing innovative products or services, and driving economic growth. They often identify gaps or inefficiencies in existing markets and develop creative solutions to address them. Entrepreneurs can be found in various industries and sectors, including technology, finance, healthcare, retail, and many others.
Characteristics commonly associated with successful entrepreneurs include:
- Passion and determination: Entrepreneurs are driven by a strong sense of purpose and are willing to persevere through challenges and setbacks.
- Creativity and innovation: They have the ability to think outside the box, generate new ideas, and bring unique perspectives to problem-solving.
- Risk-taking: Entrepreneurs are comfortable with taking calculated risks and understand that failure is a potential outcome. They often see failures as learning opportunities.
- Vision and leadership: They have a clear vision of what they want to achieve and are able to inspire and lead their teams towards that vision.
- Adaptability and resilience: Entrepreneurs need to navigate a constantly changing business environment and adapt their strategies accordingly. They are resilient in the face of adversity.
- Networking and relationship-building: Successful entrepreneurs understand the importance of building relationships with customers, investors, partners, and other stakeholders. They leverage their networks for support and growth opportunities.
- Financial acumen: Entrepreneurs need to have a solid understanding of financial management, including budgeting, forecasting, and fundraising.
It’s important to note that entrepreneurship is not limited to starting a new venture from scratch. Some entrepreneurs also acquire existing businesses or franchises, while others innovate within established companies, leading to intrapreneurship.
Overall, entrepreneurs play a crucial role in driving innovation, economic development, and job creation, making them essential contributors to society.
Are Entrepreneurs the backbone of the Economy?
Entrepreneurship plays a significant role in economic growth and job creation, but how does it affect the economy? On the surface, people think that entrepreneurs start businesses, and new businesses create jobs, strengthen market competition, and increase productivity. This is one side of the story. The broader picture is that entrepreneurs tend to directly impact the economy through growth, innovation, and capital infusion while indirectly transforming the economy by improving social inclusion, creating large-scale employment, and improving the standard of living.
Accelerating Growth and Innovation
Entrepreneurship can create value for people through the acceleration of new technology and help solve problems that existing products and technology haven’t addressed, improving consumers’ lives. Entrepreneurs through innovation often develop and adopt novel practices that allow businesses to stay in business. Several great ideas have originated from entrepreneurial ventures, enabling them to grow faster than their larger peers.
Being more nimble and agile, they can take on higher risks than their established counterparts, allowing them access to new markets at a quicker pace. Some recent examples of this phenomenon of breakthrough innovations from Indian entrepreneurs in the past decade were visible in mobility (Ola), merchant value addition (Paytm/PhonePe), and shopping (Flipkart).
Mobilizing Capital and Wealth Creation
The compounded wealth effect created by entrepreneurs is one of the primary drivers of economic development and progress in the country. By establishing businesses, entrepreneurs can fund their operations with their own money and attract financing through debt and equity capital from local and foreign investors. In the long run, entrepreneurial activities lead to value addition and the creation of wealth for shareholders, leading to a positive impact for all the stakeholders involved in the business.
In 2021 alone, Entrepreneurs in India have raised over $42 billion, with 90 companies reaching unicorn status (billion-dollar valuation).
Bolstering National Income and Productivity
MSMEs comprise 55 million businesses in India that provide access to employment for 110 million people. The industry, currently valued at $950 billion (₹7,273,800 Crores), contributes 34% of the GDP and 48% to the country’s exports. Every new addition to the 55 million businesses in India furthers the development of products and services that bolster national income, GDP, and per capita income. These economic developments further the national goals of growth and prosperity.
Increase National Trade
Businesses help promote a country’s exports, which helps improve the country’s foreign exchange balance and help strengthen the local currency. Strong business exports have led to India’s forex reserves to more than double over the last decade (from $294 billion in 2012 to $602 billion in 2022). Furthermore, stabilized revenues from companies exporting their goods and services aid the country during local economic downturns. Expansion into foreign markets also enables companies to access cutting-edge technology and business processes, helping them streamline their business.
Spurring Employment Opportunities
India faces a formidable job challenge as the second-most populous country globally with a growing labour force. Entrepreneurship and small- and medium-sized businesses provide an excellent avenue for job opportunities. Entrepreneurship creates many entry-level jobs that teach unskilled jobseekers skills and help them advance to skilled positions in big industries.
Entrepreneurs and SMEs are crucial to national economies because of their ability to create more total jobs than the more established large organizations. After agriculture, entrepreneurs and SMEs are the second largest employer in India, with 110 million job openings. With accelerated development, the influx of investments, and rapid innovation, most of the jobs created over the next decade should come from these businesses. Furthermore, these businesses have been a lot more resilient in economic downturns or recent times than the larger companies.
Creating an Engine of Inclusivity
Many Entrepreneurs have set up businesses and industrial units in less developed and backward areas to help the growth of local and regional economies. These, in turn, have accelerated the infrastructure improvements such as improved connectivity, access to resources, and other public services in these areas. Thanks to the jobs provided by these new businesses, people’s spending power have increased, which has contributed to the regional economic output.
Governments, both at the central and state levels, have further fuelled this initiative by offering SOPS to business people, such as tax concessions, credit from banks, subsidies, and funding at a lower cost of capital. Furthermore, growth from these businesses helps reduce the concentration of economic power among a few, increases decentralization and enables inclusive growth.
Improve Standard of Living
Businesses create offerings that add value to the life of the consumer. In the process, they create employment, provide a source of income for the community, increase the community’s spending power, and help elevate their living standards. It’s not just about job creation but their commitment to elevate and improve their employees quality of life of, bring value to customers, and other stakeholders in the community. For example, adopting automation reduces transportation costs and enables faster deliveries at lower prices.
Bottom Line
Entrepreneurs form the backbone of the economy. Through entrepreneurial activities, they introduce new products, production methods, and business strategies to the market, thereby boosting productivity and competition while creating employment. Entrepreneurs are vital to the health of an economy.
Prepare and write by:
Author: Mohammed A Bazzoun
If you have any more specific questions, feel free to ask in comments.
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