27 August, 2020
4 Reasons why Small Businesses are Important to Local Economies
Every economy flourishes with the synergy and co-existence of large and small businesses alike. In addition to this healthy, natural economics of business, some companies follow smart ways to survive tough economic conditions, which was covered in our earlier blog column here.
- How then do small businesses help local economies survive?
- How impactful is the contribution of small businesses to local economies?
Here are 4 reasons why small businesses are critical for the survival of local economies:
The Importance of Business Incubation Centre
One of the effective ways by which small businesses thrive is through the concept of business incubation centers. This successful model is one that involves a flexible combination of resources, processes and technology for the development of a business idea into a successfully running business with the able support of a business incubation center.
Business Incubation Center is a proven format and an easy way to setup a business due to the following reasons:
- The healthy fusion of physical space and facilities;
- Mandated regulatory requirement of office space;
- Access to effective mentorship and experienced businessmen;
- Ability to network with like-minded entrepreneurs;
- Business continuity through nurturing;
- Ability to scale up the business;
- Effective support services for the survival of the business.
Local Business Partnership
A strong impetus to small businesses comes in the form of business partnership with a local business partner. If your business is one that involves a local service agent due to the nature of the business activity and legal structure, you will have to get into finding a local partner for your business. The advantages of local business partners have been detailed in our earlier blog here
The ways by which a small business can benefit the local economy with the help of a local business sponsorship are:-
- A local business partner helps the small business to develop with the help of access to their network;
- The small business can add value to the local economy by bidding for Government tenders/business requirements with the help of business partnership;
- Finding a local business partner provides intangible benefits such as the ability to get access to key business events;
- Obtain vital Government news through an authentic source
- Enter important business councils or business groups that help you to grow and expand your contact network;
- Sometimes a business partnership provides good visibility for your business in the media
- Most importantly, your business gains immense credibility and trust in other local businesses due to the presence of a local business partner
- In the process, you also get to gain local market experience and expertise, which helps you in giving back to the economy
Low-Cost Business Setup (or Benefits of a Freezone Business)
One method by which economies flourish is by facilitating market entry for businesses through a low-cost business setup. The most common method to accomplish this is by setting up a Freezone business, as compared to a mainland business.
The benefits of freezone business have been detailed in our earlier blog column here
- Corporate taxes are zero;
- Relatively low cost of business setup when compared to mainland
- Full repatriation of profits and capital;
- Minimal export/import duty;
- Single window for administrative processes, making it an easy way to setup a business;
Business Setup Services
In order to successfully execute your idea into a business, the process involves nearly 14 steps, which have been detailed out in our earlier blog column here. Utilizing the business setup services of a professional service provider will help your business achieve a lower cost in the long run, with minimal hassles for you. Moreover, the documentary and regulatory requirements are satisfied by the professional business setup services company, while you place focus on growing your business and giving back to the local economy.
We have also highlighted the necessity for small businesses to navigate tough economic conditions and some ways to do that have been highlighted in our earlier blog column here
- Setting up an LLC Business to ease the business liabilities and limit them to business assets;
- Forecasts and projection, for better business planning with a future perspective;
- Keep costs optimal, and look for ways to help reduce financial burden in early stages;
- Insulate yourself for a pivot, and be ready to always realign your business with changing economic trends
- What is the difference between Freezone and Mainland Business Setup Services?
While there is no critical difference in the services, one major requirement in mainland businesses is the need to appoint a local business partner or local service agent for your business. However, there are some scenarios where the mainland is preferable, and somewhere freezone is lucrative, such as:-
- If you complete business setup under trading or real estate, then mainland business license would give you strong leverage for business growth;
- If your business is agnostic to the location, and getting a trade license was done keeping a professional activity at its core, then you can enjoy the benefits of a free zone business setup and that would be the logically advantageous path;
- If you trade in products, but the sourcing is done by importing it from your factory abroad, and you choose to appoint a distributor to trade your products in mainland jurisdiction, then a freezone business setup will prove advantageous;
- If you are bidding for Government tenders or projects, a mainland business license with a local business partnership lends strong credibility
- How can I Optimize my Office Leasing and Find an Easy way to Setup a Business?
Identify which option would suit your business the best – shared office space or private office space? Look for workstation solutions where possible and keep initial costs low.
- How can there be an easy way to Setup a Business?
Yes, there is. One need not look further than a professional business setup services firm