The word "entrepreneur" has a certain mystique about it. It conjures up images of brilliant and energetic inventors who have changed the world with their ideas. Here in the United States, we have a special fondness for this type of person. In fact, entrepreneurship is so closely connected to the American Dream that we in the U.S. might just think we invented the concept. Of course we didn't, but it may be safe to say that we have made it our own.
Photo Credit: PYMNTS
In reality, though, who is an entrepreneur? The Oxford Language Dictionary defines it as "a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so." There are actually four categories of entrepreneurs:
Small Business: This is the most common type of entrepreneur and includes all individuals working for themselves. This type of business may employ other people or be solely an owner-operated endeavor.
Scalable Startup: This is the inventor, the person with the brilliant idea that will transform an industry. Venture capitalists are always on the lookout for the next big money maker, and scalable startups are often the answer.
Large Company/Intrapreneurship: These entrepreneurs are already working for a company and developing new products and services for their employer to meet the demands of the market.
Social: The focus of these individuals is making the world a better place. They establish non-profits and create ways to focus on and improve social responsibility, especially within the business world.
In this blog, we'll focus on small business, which accounts for 99% of the companies in the U.S. and employ 47.3% of the working population. That's a pretty amazing statistic, with a tremendous impact on our economy. As people who are interested in mutually beneficial economics, we invite you to look at how these businesses are doing at present, how they benefit their communities, and what we can do to benefit them.
According to a 2022 US Congress Joint Economic Committee report, entrepreneurship was in decline from the 1970s through 2018. Then Covid came along and forced many people to rethink their employment. A number of them decided to go out on their own; in fact, new business applications rose by 44% from 2019-22, a trend that seems to be continuing in 2023.
On the other hand, the tightening of credit for new businesses is currently a big challenge for those wishing to launch a start up. Lending rates have decreased from 28.3% to 14.2% at larger banks, and even owners who have been in business for a while are having a difficult time procuring loans. Add supply chain issues, lack of dependable employees, and inflation to the mix, and one can see that starting and maintaining your own business is not for the faint of heart.
Yet heart is where small business shines through. According to a study by American Express and The Chronicle of Philanthropy, these companies donate an average of 6% of their profits to charity, compared to an average of 1% from large corporations. In another survey, two-thirds of them give to local charities, half support youth organizations, and four-fifths plan to give charitably in future years. Money that is made in small businesses tends to stay in its community as well, with 48% of each purchase recirculating through the local economy.
With all the good that these businesses do for their community, buying locally whenever possible just makes sense. There are a numbers of other ways, though, that their neighbors can support these businesses beyond purchasing their product or service:
Tag local businesses on social - your phone goes everywhere with you these days. Use it to take a picture at your favorite local spot, and share it with your friends with a great tag line.
Leave a positive review - It's all about reviews these days, so after a positive interaction, take a few minutes to give a 5-star rating to your favorite local.
Word of mouth - Personal recommendations go a long way. If you've had a great experience or found an amazing product, tell the people around you.
Comment, like, subscribe, and share - Visit these businesses' pages and participate in their marketing efforts. For small endeavors on a budget, engagement = success.
Change your online ordering habits - check out local websites that ship to your door. Etsy and bookshop.org can link you to many small (and local) business people as well.
The bottom line is that we need small business, and small business needs us. The mutually beneficial system that we at Better Capitalism advocate sometimes takes extra thought and mindfulness about where we spend our dollars, and doing the small but vital extra steps to ensure that those venues continue to exist. It is well worth the effort though, as continued prosperity for our entrepreneurs means continued prosperity for all of us.
What about you? Share your story, question, comment, idea, disagreement -- yes, we welcome disagreement for the sake of mutual benefit! -- with us at blog@PartnershipEconomics.com. We will give a thoughtful response.
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