Small businesses in an economy

To enjoy some respect in a community you must either have a job or business.

If you do not have any of these, people wonder how you earn your living.

In developed countries, the number of jobs an economy generates determines the success of political parties during general elections.

Although our political parties do not clearly state how many jobs they would create if voted into power, it would be wise that in the run-up to the 2014 general elections some civil society organisations compel them to do so. Speaking in general terms is not good enough.

Thousands of young men and women annually enter the job market, only a fraction of them get employed on a regular basis.

It has been recognised now, perhaps more than ever before that unemployment can be reduced if many people start small-scale businesses.

Such businesses play significant roles in economies of both developing and developed countries. They are major source of employment.

In Malawi, this is obvious. Most people in rural areas working on family plots are self-employed.

In urban centres, there are vendors on the streets or in flea markets. Without these occupations on minor scales, the level of unemployment in the country would be socially disruptive.

Small firms also contribute to national budgets by paying taxes both direct and indirect.

Historically, some small family firms have grown into multi-national firms. Few examples easily come to mind. Ford Motor Company, Toyota, Barkays Bank and Macmillan Publication Company.

The Industrial Revolution in Britain, USA and Germany was launched and sustained through inventions and innovations in small firms by such men as Arkwright and James Watts. Thomas Edison made his numerous inventions which sprouded into electrical, phomographic and other industries while he was working in a family business at Menlo Park.

We usually read in magazines that there is no likelihood these days for inventions and innovations to be made in small one-person firm. Yet the next magazine tells you of the wonders and wealth of Steve Jobs or Bill Gates.

Self-employed people tend to work with greater commitment than those who are employed by others.

A vendor will be at the flea market or by the roadside from dawn to dusk. The same man cannot accept to work for another person that long without demanding extra compensations.

Self-employment generates the work ethic which if it permeates in all sectors of the economy, it can bring about an industrial revolution of some sort in Malawi.

What is a small firm? In Europe, a firm is said to be the one that employs less than 100 people.

The small firm is subdivided into micro-firm when it is managed by only one person or employs less than 10 people. That which employs between 10 and 100 people is then said to be small firm proper.

What motivates people to start their own businesses instead of picking up a job? Several circumstances underlie the decision to go into self-employment.

A person who has spent years working for a firm or government upon retirement may wish to start a business to supplement his pension or avoid the boredom of idleness.

A company that a person has been working for collapse or declares him redundant and gives him severance pay. He tries to look for another job, but fails to get it. He then decides to employ himself by opening a grocery or if he has special skills, he may open a carpentry shop.

A person who is working for someone may resign to start his own to experiment with ideas which his employers have scorned and refused.

He may have invented a new product but his employers have not perceived any commercial value in it.

Some people have left a publishing company to publish a book that their employer rejected.

Some people have gone into business because they prefer working for themselves to working for someone else. They cherish personal independence, to be master of their own.

There are certain fields which usually attract one person enterprises while others do not. Those former require little capital such as wholesaling and retailing.

There is room in manufacturing traditional industries such as shoe making, bakery, textile and wood products.

Those who have been to technical schools might find a niche in the construction industry as building contractors.

There are opportunities in finance to work as insurance brokers, banking, these opportunities exist in advanced economies.