Lately, taking a tally of the Jordanian business starting up, you’ll notice that quite a bit of them are small business. The rise of small businesses has a large impact on many countries’ economies including Jordan. Some of the large impacts affect unemployment, filling the market gap with new small businesses that eventually become globally known.
Starting a small business has many risks, including bankruptcy, however the influence they have on the country’s economy is much more severe. Each small business that establishes itself reduces unemployment. Reducing unemployment benefits and lowers taxes on wages that could serve the dual purposes of increasing the motivation in individuals.
Filling the market gap usually happens at an intersection between two different markets. It could be at a connection of two points that are related to each other. For example, combining learning games and toys. A new product can fill a need for both fun and educational toys, combining two demographics. Market gap needs usually come as an inflection point where an existing is failing to meet an important need for a customer so a new business immerges to fill in this market gap.
Around 78% of small businesses survive while the other 22% usually fail. The reasons behind their failure are broad, but here are five of them. The first, from the very beginning some business establish their business for the wrong purposes. For example, the desire to make a lot of money quickly. The second reason is that small business are often poorly managed. The third reason is insufficient capital; a common fatal mistake for many failed businesses is having insufficient operating funds. New business owners often are not accustomed to cash flow or understand how much money they will need for start-up. Therefore, they are forced to shut down before they have fair run. The fourth reason is the location of the business. Often, business owners do not have the foresight to scout locations, choosing a poor location can be the kiss of death for a business. Lastly, businesses often see success and the suffer from overexpansion. Overexpansion can quickly increase the risk of a business failing.
The rise of small businesses is beneficial for the countries economy because it fills in the market gap to create jobs that decrease unemployment. The risk of starting a new business are outweighed by the benefits they ultimately demonstrate.