Meaning of economic development and small business
Economic development is best defined as putting in efforts to grow the country’s Economic wealth by exploring possible options towards improving the well-being and quality of life of a society and a state at large, which can be achieved through job creation and retention. Economic development is achieved by using resources and power to enhance investment (Blakely and Leigh 73). On the other hand, a small business is a business entity with a small revenue base, few employees, and operations limited in scale. Small businesses employ less than 20 people to 50 people (Longenecker 6).
There are many arguments fronted that small businesses are not necessarily the pillars of the economy. Others argue that large businesses provide even better terms of employment to a country’s human capital. Thus, there is a need to explore the role and extent of small businesses in a country’s economic development (“Best of Dubai Volume 1” 34).
The UAE government has banked on the development of small businesses as a part of a diversification strategy that would play a key role in economic development. The diversification ensures the creation of the much-needed employment that in return improves the quality of life and enabling the UAE to drift away from Oil dependency (Benesh 191). In line with the UAE’s vision, the government is concentrating efforts towards public sector support for small businesses. The department of economic development is also promoting the growth of private sector businesses by formulating and implementing favorable public policies and creating an enabling and favorable environment for small businesses to thrive.
State the points to support the strategy
To ensure the achievement of economic development, small businesses are enabled by creating such favorable conditions as listed below:
- The UAE government does not require businesses to stick to external financial reporting or any such control by the government authorities.
- The UAE government is not levying corporate taxes on small businesses to boost the growth of such businesses.
- The government is not charging the small businesses’ employees income tax to create an encouraging condition.
- The UAE hardly charges value-added taxes to small businesses to facilitate the thriving of small businesses.
- The state does not impose any fiscal control measures that would be unfavorable for the small businesses
- The government also promotes competition and provides commercial support, subsidies and financial support to warrant the growth of small businesses
The role of small businesses in the UAE
Small businesses play a key role in the UAE’s economic growth. The small businesses facilitate the UAE’s economic growth by creating new jobs hence improving the quality of life. Also, small businesses develop new products, modify the existing commodities in the market, and bring out better products (“The Report: Dubai 2013” 41). These small businesses are also expected to grow and create even more jobs in the future.
Whether promoting small businesses is an economic growth plan
Promoting small businesses is an economic growth plan given that the economy needs to grow and this can only be sustained by the persistent creation of jobs. Whereas it is assumed in many cases that large companies employ at better wages with good working conditions, benefits, and stability, there is always a growing population that needs a source of livelihood that cannot be supported by large businesses (“The Report: Dubai 2013” 44). Thus, promoting entrepreneurship and starting small businesses is the best viable option. Small businesses, therefore, come in handy in bridging the gap and perhaps, in the long run, expanding into large companies.
Factors contributing to small business success
In the UAE, small businesses have big goals and work responsibly towards their attainment. The goals set by small businesses help define and shape the destiny of the businesses undertaken and strategy to ensure success (Ras Al Khaimah 48). Businesses need to have a vision of their future with strategic plans on how they intend to achieve the laid down goals. As observed in the case of the UAE, small businesses need to have the right choice of business within a viable industry and employ competent staff. It is critical to choose a business that is going to remain relevant in the foreseeable future.
Besides, the management of the small business needs to have a creative approach that will see them through while remaining competitive in the market. For successful operation, small businesses need to embrace change, be on top of the industry trends, and embrace technological advancements. Such strategies will keep the business relevant in the industry (“Best of Dubai Volume 1” 37).
Keeping proper records is an important part of the success of businesses. Such records include financial records, customer information, sales information, and being able to utilize the information to build the business positively. Conversely, small businesses need to build a strong asset base as a key for their success while giving back to society to create a good corporate image and strong brand identity. Such strategies coupled with continuous investment research and development will warrant the success of small businesses (Benesh 192).
The role of small business in the local economy UAE
Key statistics show that 60% of the UAE’s GDP is represented by small businesses, which employ 92% of the labor force. Similarly, different economies in the world are sustained by small businesses. Therefore, this is an indication that the UAE economy like many other world economies relies deeply on the success of small businesses. In fact, without small business, the largest part of the labor force would be out of employment (“Best of Dubai Volume 1” 38).
The small businesses have also gone a step further in product engineering, providing new products, recreating, and modifying the existing ones as well as custom-making products to suit client consumption. Finally, small businesses build other industries like banks and financial institutions that lend money to small businesses, which in turn boosts the growth of the local economy (“Best of Dubai Volume 1” 38).
Benesh, Gina. Culture Shock! UAE: A Survival Guide to Customs and Etiquette. Marshall Cavendish International Asia Pte Ltd, 2008. Print.
Best of Dubai Volume 1. New York, NY: Global Village Productions Ltd, 2014. Print.
Blakely, Edward and Nancey Leigh. Planning Local Economic Development: Theory and Practice. London, UK: SAGE, 2010. Print.
Longenecker, Justin. Small Business Management: Launching and Growing New Ventures. New York, NY: Cengage Learning, 2009. Print.
Ras Al Khaimah. The Report: Ras Al Khaimah 2011. London, UK: Oxford Business Group, 2011. Print.
The Report: Dubai 2013. Oxford Business Group, 2013. Print.