You must have come across the extremely popular, not-so-appealing, and ‘often carelessly used’ statement – The rich become richer and the poor poorer. The statement seems heavy, but not many have probably attempted to quantify the depth and credibility it holds. However, the controversy behind the statement has managed to gain momentum time and again, and the internet has gone into a frenzy whenever the discussion surfaced.
But, do you know the irony attached to the testimony? The demographic on the globe that is proudly in agreement with the claim can neither be classified as rich, nor as to the poor. It usually comes down to the middle-class, the middle-men, and the mediators that happen to see, profess, agree, and promote the idea of seeing the rich getting richer and the poor getting poorer.
So, Is The Reality Any Different?
Not really! While countless pieces have praised the growth spurt shown by the big businesses, not many have directed a sincere focus on the smaller ones. Sadly, the statistics do not shy away. Data has proven that income inequality is a normal problem in the real world. It quickly validates the fact that as the high-income classes fill their pockets with more money, the lower income sections struggle to afford even the basics.
How Did We Reach Here?
The rich population has bloomed in the past few decades. If we compare the current picture with that of the 1980s, the number of rich has grown tremendously. An amalgamation of different factors has played an important role in helping businesses grow the way they did. The increasing population, changing trends, altering demands of people, the growth in competition, inflation, lifestyle changes, and more have formed a cocktail of all the reasons that helped businesses bloom over the years.
However, two factors managed to stand out:
a) Technology that promotes business growth
Undoubtedly, technology has played a major role in promoting growth in businesses. The advent of globalization, the constant yearning for technical innovation, the introduction of artificial intelligence and machine learning, and the realization of the power of big data are just some examples that prove the involvement of technology in the promotion of business growth.
But, has technology been exclusive? Partly, yes! There is a common viewpoint associated with automation and big businesses that say technology was something only the rich could afford and exploit. The poor, however, were merely spectators who felt foreign whenever talks about technology came up.
b) Government’s policies that favor businesses
Businesses are not usually a fan of government regulations. If you have even the slightest of interests in business law, you must be familiar with how the government’s policies affect firms. They often pose a huge burden on business organizations, both small, medium, and large. Where medium and large business houses tend to absorb and abide by the growing regulations with comparative ease, it is the small businesses that feel burdened under the massive controls.
The reason being the compliances and regulations are fairly expensive to implement. Small businesses, already running on a limited budget, find it difficult to afford the regulations and often crumble due to lack of funds. And, hence, we find small businesses failing more often than not.
Are Regulations Unnecessary?
Of course, not. In fact, reports have proved that the total cost of implementing regulations is usually far too low compared to the benefits they reap. Take the example of pollution control act. Who does not want clean water to drink, fresh air to breathe, and a pollution-free environment overall? Regulations and policy controls are for the good, even when they pose an unequal burden on small businesses.
What Can Small Businesses Do To Survive?
If statistics are to be believed, government regulations have negatively affected the growth of small businesses in the U.S. compared to those in other countries. Over the years, the U.S. government has introduced several barriers to the entrepreneurial sector which are equally imposed on businesses of all sizes. For example, a regulation that costs $100 will be imposed equally on a large business that earns $10,000 profit/month and also on a smaller one that only manages a $200 profit in a month. Where the large business can comply smoothly, the small business runs out of 50% of its profits in one go. And, that’s how regulations make it harder for small businesses to sustain. The barriers to competition and growth lead to feelings of uncertainty in the minds of small business owners, encouraging them not to invest in business growth.
But, this does not imply that there are no small businesses running in the country. In fact, there are several businesses springing, growing, and expanding still. But how do they do it? There are two things that can help:
One, the government needs to mellow down the regulations for small businesses. And, two, efficiency can help the small businesses to compete and sustain among the tough competition. Fully utilizing the resources, striving to sell what they are selling, not giving up in competition, and finding innovative ways to make their practice the best-in-class can help small businesses to thrive among the competition.
Undoubtedly, there is a sharp contrast between the profits earned by large business houses and smaller firms. The growing inequities in incomes and profits of small and large businesses have been concerning, but there are ways to curb these differences. Technology, for instance, has left its mark on every nook and corner of the world. And, businesses, no matter what the size, can benefit from technological advancements. For example, accounting has transformed greatly since the advent of cloud computing. With everything digitized, the chances of growth for small businesses are diverse. Therefore, a small business that wholeheartedly embraces technology can witness a promising future of multifold growth and endless possibilities.