The article titled Why Small-Business Hiring Should Make You Feel Better about the Economy by Beilfuss (2016) asserts that small businesses provide more than half of all American jobs based on the data from the Labor Department. According to Beilfuss (2016), small businesses serve as service providers who are equally sensitive to domestic consumer’s spending habits. However, these businesses are highly vulnerable to calamities and recession since they are mostly not ready for harsh conditions. As such, they need proper measure needs to be put in place to avoid small business failure when harsh conditions arise.
Data Gathering Instrument
In most cases, economic growth is often measured by the number of emerging small businesses, which serve as an indicator of a growing market and the overall growth of the economy. The growth of small businesses should be encouraged and funded to ensure job security for many people around the country. It is known that small businesses promote entrepreneurship. The businesses have, over the years, recruited and absorbed the highest number of job-seekers; hence, being the primary source of employment to many people than any other sector. They contribute positively to the economy, rendering the small businesses to be the backbone of economic growth.
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Beilfuss (2016) utilized secondary data that had been collected through statistical and historical methods. The secondary data came from different sources such as the Bureau of Labor Statistics, Labor Department, as well as the department of the National Federation of Independent Business. Additionally, Beilfuss (2016) also used sources from companies such as the Gallup, Wells Fargo, and Automatic Data Processing Inc. Most studies prefer to utilize secondary data since the data are readily available hence requiring little or no effort at all. The advantages of using statistical and historical sources in the collection of secondary data are worth looking at since one is assured of saving both times as well as money, unlike costly interviews. The problem, on the other hand, comes when validating the data especially in regards to the time difference.
How Small Business Hiring Practices Reflect Confidence in the Economy
Confidence in the economy is necessary, but that does not mean that businesses should not be ready for harsh economic times that may emerge unexpectedly. For instance, natural calamities and terrorist attacks, as well as disease outbreaks, continue to affect the future of the economy. Most businesses, especially small ones, are usually not ready for this drastic and unexpected change, and owners end up closing their businesses. Therefore, when a small business conducts massive recruitments, then it is an indication that the employers have confidence in the future growth of the economy. This is a good move considering all the risky factors such as trade wars that are bound to confront them at any time.
According to Beilfuss (2016), the hiring process is also a recovery plan in a way, thus showing that the owners are preparing themselves towards prosperity in business and other natural hazards. A company must plan ahead if it wants to flourish in a competitive market. Hiring increases the workforce, which indicates a good start for proper preparations. Additionally, one can also conclude that the hiring practices are an indication as well as assurance that calamities are normal hence representing healthy domestic economic conditions and attitude towards growth. In other words, small business hiring, as said earlier, is proof that the market is growing and that the working conditions are healthy and favorable hence a suitable approach to aid in guiding policy as well as decision making regarding future opportunities (Beilfuss, 2016). Finally, people should generally be aware that hiring is a crucial part of growing the business and thus should be one of the well-thought practices.
Economic and Political Ramifications of Job Growth in the Small Business Sector
Job growth, especially in the small business sector, has, over the years, been seen to encourage both economic and political ramifications. Therefore, the influence of the small business sector can be both positive and negative changes in economic and political divisions in terms of job growth. Based on positive economic ramifications, small businesses are advantageous in the sense that the creation of jobs is catered for. Hence, people will be able to secure their financial independence and source of income. Jobs creation is important to ensure people are economically stable through working and earning from their hard labor. This is one of the best ways to ensure that communities are economically empowered and, at the same time, generate revenue and taxes, which will benefit local and national economies.
On the negative side, the growth of small businesses in the economy can reduce the confidence level for large companies hence lowering payroll growth, which would have been improved by large institutions. Additionally, small business growth tends to encourage the reduction of corporate profits as well as the encouragement of contraction in the manufacturing sector. Finally, the expansion also creates the possibility of market distortion since the owners of small businesses will start requesting for legal support from the government hence posing a burden on large companies that get huge taxes cut and in the process risk ending monopolies.
Moreover, positive and negative political ramifications are expected to occur where there is high small business growth. Politically, positive effects are experienced where small business owners feel legally protected and supported when allowed to conduct their businesses in a healthy environment. Thus they tend to support the government system and obey the laws and regulations provided hence avoiding internal wars. Additionally, when the government supports small businesses, this serves as modern-day capitalism that reflects independence and self-reliance.
Impact of Small Business Growth and Large Business Growth in the Economy
A country requires both small and large businesses to ensure economic prosperity, assurance, and confidence in the economy at large. The existence of both businesses is an indication that everything is running as it should and that there are hopes and future in the economy. However, continued growth in both sectors has significant consequences that cannot be overlooked. These consequences or effects can be classified under two categories, namely positive or negative impacts. On the contrary, the good news is that economic output growth is highly encouraged by the growth in both small and large business sectors.
On the one hand, it has been proven that large business growth usually leads to short-term gains in terms of employment, which results from the outsourcing of services. While, on the other hand, small business growth results in higher and increased economic growth since they provide income to many people hence benefiting the respective communities (Beilfuss, 2016). In most cases, large businesses are usually located in different states, which may lead to slow economic growth due to internal systems differences, especially legal supplies, and accounting services.
Secondly, growth in small businesses encourages innovation and productivity in the respective localities. This is easily achieved since most small businesses rely on the services they get at the local level, such as accounting and wholesalers. On the other hand, large business growth does the opposite by discouraging entrepreneurship due to the outsourcing of services, which could have been easily obtained from the local communities. This fact is evident in cases where large companies make their infrastructure without involving the locals. Additionally, profit margins are reduced by large businesses and harm the working environment of small businesses due to their professionalism and product designing that could have been done by small businesses (Beilfuss, 2016). The sharing of the market with large companies is not suitable for small ones since they create competition that only hurts the small businesses.
On the contrary, large businesses are not that all bad since they also offer job opportunities in large numbers to many people, and therefore their failure would lead to economic calamity due to massive job losses. In other words, there would be financial distress if a large business was to fail, especially since the government might be forced to bail them out, which will, in turn, result in huge debts. Similarly, small businesses also offer a contribution to economic growth through the collection of tax and their failure would also pose a negative effect as well.
Conclusion
In conclusion, both small and large businesses form an essential pillar in the economic development of a country. They should be subjected to favorable working environments to ensure they prosper. This means that they are both key drivers of major economic activities and should, therefore, be encouraged and supported by all means possible despite the mention consequences, whether positive or negative. Local and national preparedness programs need to be put in place by the relevant authorities who play the major role of ensuring the solution for the ramifications are provided. Thus it is upon the government to ensure that appropriate policies and measures are put in place to combat the challenges that might arise from the ever-growing business sector. If the right steps are put in place and enacted then, one can be sure of healthy business growth, be it small or large hence securing the future of the economy.
Reference
Beilfuss, L. (2016). Why small-business hiring should make you feel better about the economy. The Wall Street Journal . https://blogs.wsj.com/economics/2016/02/19/why-small-business-hiring-should-make-you-feel-better-about-the-economy/
