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Why is business important?

Why is business important?

On a most basic level, business provides a means of income for a population. People need money to not only survive, but to enjoy their lives. In exchange for their labor, businesses give money to people which they can then use to purchase everything from food to vacations. This helps a population survive and thrive.

Businesses also foster innovation and competition. 

 

By having multiple similar businesses in a market, healthy competition can create better goods and services. Consider a small town which has two quaint coffee shops. If one shop creates a new holiday brew, the other shop will likely follow with a similar new treat to avoid losing holiday customers. The two shops are also unlikely to significantly outprice each other so that customers in search of a cup of coffee will not be deterred by price. Both of these are healthy impacts of business.

Businesses also contribute to the identity of communities and nations. 

 

The services businesses offer to local communities shape the networking of people within those communities and even influences the types of people who travel to particular areas. On a larger scale, this is true at a national level. A nation's tourism economy relies on the businesses within that nation to attract travelers—and to then generate more revenue within local communities and the larger nation.

Thus, businesses also impact the tax base. This isn't the most glamorous aspect of business, but it certainly impacts economies. The presence of businesses can significantly affect things like educational opportunities within a given community. If a local community has no (or very few) businesses, it is also devoid of financial resources which are needed to provide services for its populace. 

 

The revenue generated from taxing businesses helps to repair roads, maintain schools, and improve public services. A community with more resources is then often more valued and valuable to people who want to live there, which secures real estate prices for residents. Having reliable business communities throughout a nation thus ultimately protects the real estate investments of property owners and increases a nation's sense of self-sufficiency.

 

Businesses operate globally. This means they contribute to the nation's economy by connecting with other companies in the global economy. Global economies lead to establishing relationships with foreign countries. The relationships companies establish internationally foster cooperation and understanding, which helps to underwrite world peace. A stable world economy depends on cooperation and global trade relations.

 

Finally, a less tangible but equally important aspect of the contribution of business is to people's psychological welfare. Companies provide jobs, taxes, and contribute to the economy by generating income and wealth. Businesses are often community hubs where people socialize and meet. Think of your local coffee shop or favorite restaurant. These are places you go to commune with friends and to socialize. Every economist recognizes the value of positive social interaction in the economy.