Starting up a business encompasses several components and entities. It does not only generate effects towards yourself and to the ones who have immediate involvement but it also echoes across to a larger scale - the community. Entrepreneurship bring forth positive and negative impact to the whole society as it is participated by multiple elements that make up your business. A good example is the accumulation of national budget which is highly dependent on the performance of the national economy where small business play a big role. It is also worth noting that in the same manner, external factors can influence on how you operate as a company and have the potential to produce lingering effects to your organization.
Most entrepreneurs without formal background in business management engage themselves in the industry without having a wide point of view of how businesses work. Most often than not, they hop right on to it with a single goal in mind which is to build an avenue to create income. Coupled with the formed ideas, the spirit and excitement kicks in. This kind of mentality and behavior is not a bad one to have. However, starting up a business has multiple demands that often times you are not prepared for.
You can prepare yourself to perform better if you have a full visual and understanding of what can happen not only to you but to the community as well once you start involving yourself in this kind of activity. There are two outcomes that you can expect from this engagement: failure or success which has both extensive effects to you as a company owner and to the rest of the community. Read further to find out a more in-depth interpretation of what is bound to happen for you in starting up a business.
Let us begin first with the personal and community impact of business failure. Per se your company did not work out as planned. It did not flourish into the kind of company you envisioned it to be. Here is an overview of what to expect:
Personal impact of business failure
· Loss of financial retirement – financial retirement is the act of stopping to work because one has enough funds to support him/her for the rest of his/her life. Main reason why you engage in entrepreneurship is to prepare for the future. According to a report given by Boston College Center for Retirement Research, less than half of Americans have enough to live and maintain their planned standard of living which heavily relies on the economic performance of a state. Given that your income generating activity failed to succeed, it takes away one opportunity of living comfortably when your retirement day comes. Aside from this, incapacity to self-provide usually happens to people who tend to use their personal savings to continuously keep their businesses afloat which is a move you must avoid.
· Loss of Marriage/Relationship –with the amount of dedication you built in managing your business, it is normal that you become so much invested towards your passion. For entrepreneurs, they hardly separate business with personal relationships because business is something they love to do. With that kind of attachment, a failed business can produce an adverse effect such as self-pity, anger, lack of motivation and discouragement that harms the health of your relationship with the people around you that resulted from an unsuccessful business.
· Health and Emotional Issues – a failed business can be detrimental and can take a toll to your overall health as it causes anxiety, depression, loss of appetite, stress to name a few. There are a lot of sleepless nights trying to figure out how to bounce back from the mishaps in business. As per the conducted study of Advanced, a software firm, 65% of small business owners are suffering from mental health because of cash flow, tax, and failing profits.
More than that, as an entrepreneur, you do not only think of yourself but also the people who are dependent on you – your staff and family members. Meaning, you are accountable to them as far as the effects of your business failure is concerned. The gravity of this problem can be overwhelming that it can damage your state of mind and body.
· Loss of Youthful Opportunities – taking part in building a business will surely teach you lessons that will be instilled in your being. However, you are to miss this if your business venture failed to do well which has unfavorable effects towards aspiring successful entrepreneurs such as lack in leadership practices, independence, and relationship building.
Community impact of business failure
· Poverty – to fully operate a business, you need staff and employees to help you out in performing daily tasks. Building your team to run your company generates opportunities for other people to create their means of income. Aside from that, businesses also pay taxes which is used to cover the basic needs of the mass and improve the quality of life of the public in terms of health, housing projects, and food. The economy’s performance greatly roots failed business which entails lack of financial resources that hinders you to provide pay out and taxes which both leads to poverty. In the report of Goalkeepers in 2018, Extreme Poverty which is living on less than $1.90 has fell to less than 10% of the world’s population wherein economic growth has a significant impact.
· Reduced Property Value – when businesses fail, this event contributes a negative impact towards the economic health and property value of a certain area. An under performing business means that there is no enough revenue coming in hence it is more likely that entrepreneurs cannot afford to buy/lease a space. With a lesser demand, the lower the cost these real estate properties to make it more affordable to the buyers. Furthermore, prices of real estate are highly dependable on the state of the economy as it is driven by the size of the population, interest rates, job growth, law of demand and supply and other economic indicators.
· Empty Buildings - companies are in need of spaces they can use to function and operate. With the demand for office spaces, more land developers invest in structuring office buildings. However, businesses that fail to thrive results to funds shortage which means that operating expenses of an office space/building can be affected. According to the U.S. Bank, 82% of small businesses fail because of mismanaged cashflow. Poor budget allocation for sustaining a space/building, unpaid utility bills, and liens lead to location abandonment that turns into hangout place for drug and prostitution activities
· Increased Crime – Based on Harvard Business Review, there was a study in 2010 that suggests that an operating physical business provides $30,000 worth of social benefit due to larceny prevention it gives. On the other hand, closure of mixed used areas due to business failure can increase the crime rate of a locality. Because of the physical stores left by business owners, the foot traffic of that location is lessened hence, it can be a strategic place to conduct crimes and illegal matters because there is no much regular activity going on there.
· Lack of Health Care – with the rise of expenses in ensuring health is at its best shape and well maintained, medical assistance is offered by businesses to increase their hiring success rate. Health Maintenance Organization is usually included in the employment benefits of an employee. Hence, business closure takes away these benefits from employees which leads to limited access to proper health care which results to poor health and medical care that is needed.
· Homelessness – this is a result that is derived from the shortcomings of other systems. The number of businesses that failed are great influence in the economic performance of a region which is a contributor in providing affordable homes. The Business Journals implemented a survey in 2017 to identify the main causes of homelessness in Los Angeles. It drove them to the result that 30% of participants live on the streets because of job loss and 39% answered it is due to unemployment. This means that underperforming businesses are sometimes forced to implement retrenchment to cope up with the company expenses and an outcome of this is inadequate to provide personal funds to support basic needs.
· Increased Unhealthy Entertainment – The amount of stress you deal with pre, during, and post business failure can take a toll in your wellbeing. People usually engage in unhealthy entertainment like illegal habits or destructive activities that claim to relieve you from stress and any form of being disheartened. The emotional impact of an unsuccessful business leads some to get on quick escape from the consequences of business closure and problems through drug abuse, excessive gambling, and other forms of harmful practices.
On the other hand, business ventures that were led to success also have expansive effects to people with direct engagement all throughout to the community. Be inspired by the list below that shows how you can immensely contribute positive changes into the life of others by winning in business.
Personal impact of business success
· Financial Freedom – every entrepreneur’s goal is to be financially independent which means to have an avenue that generates income even without the effort of lifting a finger. It provides you limitless opportunities to live the life you want for yourself and family without having to worry so much about sourcing for finance.
· Fulfilled Relationships – succeeding in business means you have created a system that works for your company. With that being said, an outcome of this is being able to carry out and deliver the desires of your customers. Your personal relationships can also benefit from this result because you have a business structure that allows you to bond and connect with your family and friends. Based on the study “For Richer, For Pooerer: Money as a Topic of Marital Conflict in the Home”, money is the most usual cause of the 740 instances of marital conflict between 100 couples. It is safe to say that succeeding in business gives you the capacity to financially provide and emotionally support your marriage and family.
· Healthy Lifestyle – the capacity to dive into activities that promote your wellbeing is the product of a successful business. Your health is affected by your business’s health through the stress and problems that you encounter daily. Therefore, with a game plan that allows your business operations to run effectively and efficiently, you are opening yourself into other undertakings that nourishes a healthy way of living. With a business that is thriving, you gain the luxury of time and money to engage in other activities that away from any from of stress.
· Emotional Happiness – making your company thrive is very rewarding. Not only does it enable you collect abundant earnings but it also gives you true happiness by knowing that you achieved your business goals and desires were fulfilled. Ultimately, it makes you proud of yourself and the rest of your team for weathering the storm.
· Expanded Opportunities – the prowess of winning in business equips you the chance of exploring other breaks to grow your business. The combination of systems that allow you to perform in an utmost manner results to opportunities in diversifying your business and discover other income generating practices.
Community impact of business success
· Increased Resources for Infrastructure - in 2019, the US government spent $98 billion on infrastructures where in the main the chunk of drivers of this budget are taxes of businesses. Businesses that are thriving are the ones who greatly contribute in driving the money that is dedicated to financially support projects such as schools, hospitals, houses, and roads. These facilities are meant to enhance public systems such as transportation, employment, health care, education, and the likes which also help companies to better operate their businesses and supply the demand that is created.
· Safety – safety’s general meaning is the state of being secured and away from any form of harm. Businesses that are successful provide security to its members by ensuring that employees are compensated well, there’s opportunity for growth, and employment rate is steady. It almost means that there is no reason to be in physical danger because the members of the society have a stable source of income.
· Strong Health Care – more than anything else, health is should be the top priority for everyone as being in shape enables you to perform all of your duties regularly. An American-British economist stated in his journal that in 1980, a family income of more than $50,000 has 25% more life expectancy than families earning less than $50,000. In today’s age, you can notice that well developed countries have exemplary health care system. It is evident that successful businesses play a significant role in the national budget because of the financial participation of booming businesses which are great sources in creating strong health care facilities.
· Better Schools – children being able to participate in a good education system are more employable as they have the capacity to perform tasks better and contribute substantial knowledge to an organization. According to National Center for Education Statistics, in 2019 the employment rate of people who completed high school in the US is at 74% while college degree earners are at 80%. It goes to say that these children can be a great help and asset to a make a business thrive. A thriving economic growth generates the ability to produce equipment that are beneficial to the educational welfare and development of the students. More than that, it also offers competitive salary to the teachers which draws them in and create a skilled and talented new generation. The cycle is continued by the future generation who are well educated and trained once they engage and practice one’s talent in different business industries.
· Abundance of Professionals – having the best team who will work with you to thrive in business is an essential need. As you grow your business, you will be needing a workforce who will support you every step of the way. This serves as an open invitation to aspiring employees to be part of your company. In connection to the accessibility to better schools, children have a higher rate of becoming professionals providing that they have better education system. At the same time, opportunities to be exposed in other business roles and learn new skills are raised which will hone their expertise in their respective fields.
· Increase Home Ownership – during the administration of Clinton, the President met his national goal to increase the homeownership rate. In 2000, the rate was at 67.2% and this was greatly attributed to the strong economic growth and low unemployment rate.
The capacity to increase your wealth by investing in real estate properties such as buying a house is achieved by the help of good cashflow of income. Managing your company does not only mean generating revenue but it also indicates that you are performing great measures to make sure that your funds are balanced and well spent. These practices are also a great help that you can apply in budgeting and administering personal finances.
· Plentiful Physical Fitness Opportunities – not only a successful business brings you financial freedom but also the liberty to engage yourself in activities that promote healthier and fit lifestyle. After the hard work and self-deprivation in order to achieve your business goals, this is your time to take some rest and enjoy the fruits of your labor.
· Healthy Entertainment – to thrive in business produces funds that allow you to reward yourself and the whole team for their unlimited effort. Moreover, it is proven in global studies that there’s a correlation between happiness and undertaking healthy entertainment such as sports, music classes, or travelling. The positive energy that you generate when you are happy stimulates you to participate in your other interests.
· Increase Regulations in Promoting Success – it is inevitable to create new systems and standards that work on your organization when you reach business success. This is because you have identified the framework that produces real and better results. With that, you involve yourself and your team in refined, precise, smart practices that will continuously lead you to thrive.
If you want to involve yourself in business, one must be able to see and understand the transcending effects of entrepreneurship. The positive and negative impact of engaging in business can be very experiential and eye opening. It unveils the truth that this profession cause endanger your health, the behavior of the society yet it is capable to give you fulfillment, opportunities, and better future of the community.