Growth of small businesses has been rapid in most of the economies and this had been possible in the past couple of decades. About 30 years ago observers said that by year 2000 large businesses will be the main driving force in the economy and there won’t be any room for small businesses. The fact is that small businesses are the backbone of the developed and developing economies. For example: - In USA small businesses represents 99.7% of all employers, it represents 26% of America’s exports and they create 80% new jobs each year.
Growth and success of a business can be measured on many different variables which also includes annual turnover, profit and employment growth. As in other businesses small businesses have been helped by factors which had contributed to its growth. Growth in small businesses has been aided by policy measures by the government which has supported these small businesses, the macro-economic factors, industry factors and firm-specific factors. Having the intention, the ability to setup and grow, getting the right opportunity, easy access to finance, favorable rules and regulations and market conditions which are aimed at small businesses have also led to the growth of these businesses.
People are motivated to start their own business where they have greater control of the business, can stay independent , can manage the business in their own way, the financial freedom, the potential income they can earn as their aims are to reach the top of the table, the amount of financial gains they achieve and the joy of winning which is driving factors for the entrepreneurs as it helps satisfy their achievement instincts. Everybody wants to be their own boss and this is also one of the factors for starting up your own business. Lucy Martin, author of “Make it your Business” said “Whatever your situation, there is likely to be a combination of ‘push’ factors (propelling you out of current jobs and situations) and ‘pull’ factors (which attract you to self employment)”. Countries with low income or in developing countries more small businesses are being setup because of the push factor as there is a high number of unemployment and people are forced to start-up their own business. In high income countries or developed countries small businesses are increasing due to the pull factor as more and more people are interested in setting up their own business go become independent.
Sometimes businesses fail or people get frustrated and it is at this time that they need to remind themselves what motivated them to start their own business and this motivation and dedication has led to their growth and success. According to Schumpeter entrepreneur is an innovator as he/she brings about a change and introduces new technological processes or products and brings in new ideas which are necessary for a business to grow. He also said that only certain people have the ability to become an entrepreneur and to perform extraordinary tasks.
Small businesses are the ones that tend to grow faster than large businesses. They indicate higher number of employment growth. Small businesses accounts for more than 50% of the employers in European Economies. France, Italy, Spain, Greece, Germany and UK are the leading economies of the European Union where small Businesses have been thriving for the past two decades and where small businesses accounts for more than 50% of the total employment. In Greece small businesses accounts for as much as 86% of the number of people employed. In 1998, a charter for small business was adopted by European Council which has helped in the huge number of growth in small businesses.
Banks are the main source of lending for small businesses and they depend a lot on them for support and cooperation. HSBC was one of the banks which started recognizing small businesses as one of main force in the economy. In UK small business employ about 12 million people so as to recognize and...
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