Why are small businesses important for the economy

It goes without saying that small businesses promote and encourage local entrepreneurship. But more than that, this article continues that, “Small businesses provide opportunities for entrepreneurs, jobs for neighbours and gathering places for communities. They’re rooted in the landscape where they grow, and they give back vitality and sustenance.” For many, small businesses are the local corner shops, or the homemade brownie side hustles the teenagers down the road are selling, but Pineapple Payments reports that small businesses are in fact any business with less than 500 employees. In this case, almost every business can begin to sound like a small business, from restaurants to marketing agencies. The impact of small businesses can then be considered major as they are continuously creating jobs and supporting other small businesses as vendors for products or services.

So, what makes small businesses so important

So, what makes small businesses so important?

Chron reports that a major reason why small businesses matter to local communities is the emotional attachment that they have to buying and selling with neighbours and friends.

This was more than true during the COVID-19 pandemic as we saw hoards of people looking to support local, small businesses instead of opting for the bigger chain stores around. Consumerism increased and so did the expansion of small business ventures throughout the world as people sought to make other

streams of income after being made redundant due to the pandemic (read more about that here). When looking at this, we can begin to understand the economic benefits of shopping locally are also attributed to stabilising the economy and ensuring people are paid, fed and healthy. Small businesses are often the only ones that can survive in towns and villages with a shrinking population the Chron report suggests. Small businesses in large cities however, are more likely to have a greater selection of products or to offer more unique or customised customer experiences.

small businesses so important

In summary then, we can pinpoint the importance of small businesses as follows:

1. Job creation for the local population and keeping the cycle of money flowing through the local economy

With small businesses growing and continuing to grow, especially with the easy access to wider audiences and the support from big tech like Instagram’s “support small business” button and Facebook’s marketplace, we can see the expansion of businesses occur quickly once a business has reached a wide enough audience or market. This in turn creates new job opportunities for locals who are unemployed or in some contexts, looking for part-time work. Further, when small businesses expand, they tend to take their peers with them. It’s common that small businesses will deal with other small businesses that can offer services and goods, creating a cyclic local economy.

Job creation for the local population and keeping the cycle of money flowing through the local economy

2. Having the niche and the will to make the consumer experience personalised and therefore more enjoyable and engaging.

What makes small businesses a lot more appealing and valuable than corporations are the minute attention to detail they give to the delivery of their service or product.

Personalisation of a service or product can make the experience of supporting a small business feel so much better. Consumers love to feel valued and important, and this is something in particular small businesses just seem to get right. From customer service to packaging to extra accommodations, small businesses are typically everyone’s favourite before having to deal with big corporates.

Having the niche and the will to make the consumer experience personalised and therefore more enjoyable and engaging.


Small businesses are important for the economy because it is what keeps the flow of money going. In the face of the COVID pandemic, we saw how small businesses reached record-breaking new feats in growth and expansion, despite many major businesses closing down. This is likely owed to the big campaign that was driven globally to support small businesses. They contribute massively to their local economies and without them, if an entire population depends solely on big corporations for jobs, the redundancy levels would have seen a way worse scenario for millions of families around the world. It’s in everyone’s best interest to support small businesses!

Small businesses are important for the economy