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Quality over quantity: Does having many businesses boost a country’s economic growth?
Many entrepreneurs are being encouraged to start businesses with banks issuing loans for capital and some are not fazed to quit and start their businesses…
Does having many businesses boosts a country’s chance of having a notable economic growth or does it derail the time taken by individual business owners to make spending money and in turn support the other startups(as now clients) in the sense that they can have purchasing power.
Does having many businesses boost a country’s economic growth?
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Nahashon Kimemia
In around 2014, Kenya had 310,000 registered businesses. In 2005, we had about 100,000 registered businesses so that is a significant improved. Kenya has a population of nearly 50 million people.
In 2016, the number of registered companies in the UK that pay tax stood at about 2.55 million. The UK has a population of 66 million people. In Kenya, we need numbers. We need more businesses.
Only a small population of the Kenyan population receives a salary at the end of every month. They have no choice but to try business. Let us encourage them to try something instead of spending their time looking for a job.
At a macro-level, someone replaces a person who quits. The one who quits may fail at business. He may succeed. In both cases, he would have injected capital into the economy while giving another person a chance to work.
At a micro-level, it is only good to try when you have enough capital and connections in case something goes wrong.
The economy benefits when someone tries. It does not when someone fails to try.
Manser Thelua
Failures are also beneficial because there is always cash flow involved. You may fail but the economy gains in the long run. For every failure, there is a success.
Tracy Akoth
I will go for lesser business that are of quality. That way we don’t have unhealthy competition and more people get to benefit from a very few resources as opposed to many people using many resources and having very little or even no impact.
Manser Thelua
In the short run, no. The unhealthy competition reduces sales and kills the businesses even before they become stable. However, in the long run the businesses that succeed end up boosting the economy because the high competition creates an increase in quality which in turn leads to higher sales. It is almost like the law of diminishing returns.