How Do Small Businesses Affect the Market? Let’s Find Out

Small businesses contribute significantly to the global market, but they don’t always get the attention they deserve from politicians and government officials. While large corporations like Walmart, Amazon, and McDonald’s grab headlines and sales numbers by the billions, small businesses tend to go unnoticed in national media coverage of the economy, despite their vital role in local economies throughout the country. Whether you’re starting a new business or supporting small businesses in your community, here are some of the most fundamental ways small businesses positively impact the markets and the economy.

  • Small Business Helps Stimulate the Local Market

Small businesses act as an economic multiplier because they employ more people locally. Small businesses hire more and grow their customer base locally when performing well. The local customers then spend money at other local companies, which employ more and contribute to their growth in a snowballing effect.

The ripple effect can also help build up local market areas—as one business thrives, others start to follow suit. When that happens, markets begin to shape organically, from restaurants and small retailers to large corporations with shops and those who stay in these areas. Hence, there’s a need to support small business initiatives in your area to help boost the local economy and support each other in your area.

If that doesn’t get you going, think about how much more job creation comes into play when considering businesses with fewer than 500 employees. Small businesses employ over 90% of all employer firms in America and generate 64% of private-sector jobs — those are figures worth celebrating. Additionally, smaller companies create more diverse employment opportunities for traditionally underrepresented groups, including women and minorities. Studies show these small firms’ impacts significantly affect society and individual family well-being.

  • Small Businesses Provide Competition

Because small businesses are often independently run, they can be a great source of competition for larger companies. Small companies will often try to offer similar products at lower prices to what big businesses provide to attract customers. This increased competition can help drive down costs for consumers and make it easier to shop around without feeling like they’re sacrificing quality.

  • They Add Value by Bringing Variety to Local Markets

Though big-box stores have their place, small businesses make local markets unique. People love stopping in and buying local produce or having a one-of-a-kind store cater to their needs. The reason is that people naturally want customized solutions. Local small businesses give precisely that—and they’re usually cheaper than their big-box counterparts as well! However, although small businesses aren’t inherently better in every case, they represent an excellent way for individuals and communities to exercise more choice in how they live life.

  • Small Businesses Offers True Customer Service

It’s hard to find that kind of service at a big-box store, and it’s especially true when it comes to customer service. Small businesses are more likely to have employees who care about their jobs and care about you as a customer.

It might be because they work in smaller shops with direct communication between management and employees or because they operate out of love for what they do rather than trying to get rich quickly. Either way, they know you by name and will go above and beyond your expectations to help you. It’s almost like getting free therapy every time you go shopping!

  • Small Businesses Drive Innovation

Small businesses provide stiff competition, which drives innovation. Because small businesses need to think of ways to stand out from their peers, many try new ideas that become trends later picked up by more prominent companies. For example, In-N-Out Burger was an idea by a small business owner and has pioneered two successful concepts: drive-through restaurants and placing a significant emphasis on customer service. These are now standard features of fast food chains around the world.

The takeaway is that supporting small businesses often inspires innovations. Though big companies usually later adopt these creative ideas from small businesses, consumers benefit at the end of the day. If you want to make an idea into something big, it may help start with a small business. If you’re after insight for a new venture, it might be worth seeing what your local mom-and-pop shops are offering before trying something completely novel.

  • Small Businesses Makes Good Use of Local Resources

The presence of numerous small businesses in a market allows for better use of local resources. Small companies are more likely to engage with local producers. If a carpenter is looking for new siding or a plumber needs some fixtures, they’re more likely to call a nearby business owner than order something off Amazon.

Small businesses work with local resources instead of sourcing inventory from an extensive supply chain. Consequently, it helps support local communities by ensuring that the money they earn stays within community borders as other people living in the area benefit from their efforts. If you own a business in your city, supporting other local businesses is essential to keep your city thriving.


Small businesses are a great asset to the local community because they create an economic multiplier effect which helps the local community and businesses to thrive as businesses support each ther and more jobs come into play. Consequently, small businesses make local communities better places to live and work. It’s therefore essential to decide where you spend your money wisely. Invest it locally by supporting small businesses whenever possible. As a consumer, you have much power over how your local economies grow. If you choose to support local small businesses that take personal pride in their products or services, the communities will thrive economically and socially for years to come.