Before we address this question, it is important to understand the entrepreneurship/business (both are interchangeable in this context). Entrepreneurship is a process of designing and starting a new business, with the objective of earning a profit. The start of any business requires an investment of capital, labor, management and time, which are considered the inputs and the objective are to translate these inputs into a profit. However, the process, of translating these inputs into profit, could be long and cumbersome. Economists assert that entrepreneurship or independent business has a lot of befits for the economy, especially small business. It is believed that businesses, whether large or small, play their parts creating wealth. In addition to the creation of wealth, businesses create employment, and they act as agents of stability for an economy. Small businesses are less impacted by upheavals in a capitalist economy, and because of that, they act as anchors (Vasquez, 2017). Large businesses too are of great importance, as they can generate employment at large scale. In addition to the generation of employment, large businesses can create wealth at large scale, which aid country and society in various manners (larger the profit, greater the revenue for state plus more the businesses more the competition/innovation). In developed and developing countries, governments devise strategies to encourage private business at various scales. The European Central bank has devised a very comprehensive strategy and policy for Small Medium Enterprises, as they have a positive impact on the economy in both short and long-term (European Central Bank, 2013). From this discourse, it has become apparent that for several reasons, private business has relevance. However, the topmost reasons are 1) creation of wealth, 2) generation of employment and 3) stability of the economy. All these factors directly impact society, as it reduces unemployment and increases stability in the form of low prices and high wages.
References
European Central Bank. (2013, April 11). SME financing, market innovation and regulation. Retrieved from https://www.ecb.europa.eu/press/key/date/2013/html/sp130411.en.html Vasquez, J. (2017, April 18). Why Are Small Businesses So Important for the Economy? Retrieved from https://www.huffingtonpost.com/entry/why-are-small-businesses-so-important-for-the-economy_us_58f61f9ae4b048372700db75
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