From Industrial Revolution to the Technology Revolution:
Prior to the Industrial Revolution from 1760 through 1840, the picture of business was largely based on small proprietorship’s comprised of skilled craftsmen and farmers. As equipment inventions grew, the ability to mass produce goods and services increased.
It is easy to see the effect on the economy. With an abundance of goods, supply and demand produced a steady, relatively stable economy. However, global trade had yet to reach today’s epic proportions, which would bring with it a host of additional issues and affect economies of trade partners.
The more handicrafts and agricultural economies changed, the domination of large scale manufacturing evolved to today’s high tech revolution changing the face of businesses, domestic and global trade and the economy.
How Businesses Carry the Economy:
The basics of how businesses carry the economy depends on several factors. These include:
. Cost
. Efficiency
. Scarcity
. Supply and demand
. Elasticity
. Utility
. Competition
. Monopoly
. Oligopoly
The Importance of Small Business vs. Big Business:
Where once big business conglomerates dominated the U.S. landscape, the effect of venture capitalism on a grand scale has affected the economy.
The structure of the economy relies on innovation and invention to drive business progress to economic stability. Venture capital works hand in hand with investments in businesses. This presupposes investors understand risks with regard to venture capital investments.
Today, small businesses carry the economy by consistently regenerating invention and innovation. In addition, small businesses are the lifeblood of the economy because they provide jobs.
Big business often outsources or contracts offshore for employees which impacts the economy negatively. While the end result of this is profitable for big business, the overall economy lacks sufficient jobs to provide purchase power to consumers.
When consumers are jobless, they become thrifty and spend less. The ripple effect of this is a reduction in the need for products and services and local and reduction in federal tax revenues that drive economic stability.
These factors are solid reasons to support and promote small business. Another factor is the survival rate of small business as compared to big business. According to the Small Business Administration, small businesses survive five years or more, unlike big business.
Cost, Efficiency, Supply and Demand:
Small business startups survive longer mainly because the cost and investments are less prohibitive than those of big business. A smaller business can also be more efficient due to its size factor. This shows how these businesses carry the economy forward.
Many small businesses are based on goods and services consumers need or use most. These include:
. Beauty salons
. Coffee shops
. Jewelry stores
. Repair shops
. Dry cleaners and laundromats
. Diners and restaurants
Many small businesses branch out to become franchises. Note that franchises tend toward inexperienced business owners. The basic business operations in franchises may not be as efficient or cost-effective due to owner inexperience. Still, there are a sufficient number of franchises that do succeed and become profitable enough to carry the economy.
The Business Engine that Drives the Economy:
Since investments in business are the engines that drive the economy, this is proof that a successful business landscape bears the burden of impact on the economic stability.
Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor that was founded in 2001.
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