We often hear that entrepreneurship is important, but it's difficultto overestimate how crucial it is for the economy as a whole. Entrepreneurialactivity, or the start-up of new enterprises, is what keeps local economies afloat, our country's GDP growing, and the stock market afloat. So, what makes entrepreneurship such a potent economic development engine? It's more complicated than you may assume.
First, data suggests that entrepreneur-founded small enterprises aredisproportionately responsible for job development. Small businesses in theUnited States create about 1.5 million employment every year, accounting for 64% of overall job growth.
What is the significance of new jobs? Job creation is a component ofeconomic growth. More people working means more available employment, and morepeople working means higher GDP. Furthermore, more people have recurring income and are able to better support their families.
This may also result in a cascade of entrepreneurship, in which moreindividuals work, have the opportunity to save money, and then start their ownfirms.
Impact of new businesses
It's also worth noting that a new small firm will have an impact onthe local community of other entrepreneurs. For example, once your company isup and running, you may want to hire a local marketing firm to help with digital marketing or contract with local vendors to purchase the raw materials you want. In consequence, a single enterprise can assist hundreds of others, resulting in a groundswell of economic development investment.
Technology and innovation
Innovators are also entrepreneurs. Some of our generation's mostnotable entrepreneurs have been tech visionaries who have introduced us tobrand-new concepts and services. Consider how much of an impact Google, Amazon, and Facebook have had on the globe; just 20 years ago, these firms didn't exist (or didn't exist at all). Now, each of these organizations offers a plethora of tools that other businesses may utilize to operate more efficiently, attract a larger audience, and increase profits.
When one entrepreneur succeeds in innovating, the entire worldbenefits. More innovative technologies are being introduced as a result ofrising rates of entrepreneurship, and our collective productivity continues to rise.
A challenge to existing business
Businesses tend to become stagnant as they grow larger and older.They operate as mega-bureaucracies, lose efficiency, and stop innovating,instead offering what they already know and understand. To put it another way, they grow large, slow, and stationary.
Young businesses managed by ambitious entrepreneurs, on the otherhand, are flexible and adaptable. They rapidly become aggressive competitors,forcing big corporations to alter as a result. To keep up, even mega-corporations must become nimbler and seek to innovate, which has a significant beneficial impact on the economy as a whole.
Financial risk and investment opportunity are two factors toconsider
New enterprises help more than simply the people who started them.They will also benefit everyone who puts money into them. By selecting theproper entrepreneurs and business ideas to invest in, angel investors, venture capitalists, and other first-line investors can make a lot of money. Even modest investors can build money by investing in enterprises in their early stages of development.