5 Reasons Why Entrepreneurs Improve the Economy

by Helen Fitzgerald; Updated September 26, 2017
Entrepreneurs provide employment to millions of people.

Entrepreneurs are risk takers in the business world. They start up or invest in small companies and generally take all the risk inherent in them. However, they also can generate great wealth if the venture is successful because they take much of the profits. A child who sells lemonade in front of her house for a profit is an entrepreneur just like a wealthy businessman who decides to invest millions into a new venture or a small startup company.

Jobs

Probably the most important way in which an entrepreneur helps improve an economy is through the creation of jobs. Their actions, vision, ideas and risk taking – if successful – can result in employment opportunities for thousands of people for generations to come. Or they could simply result in two or three people in their community gaining work. Some companies started by entrepreneurs go on to become multibillion-dollar global giants. In fact, many of the huge companies in business today were at some stage small entrepreneurial ventures.

Taxes

Entrepreneurs pay taxes and their employees pay taxes. Many entrepreneurial ventures bring in export revenues. The more successful companies a country or state has, the healthier its general revenues will be. This has a ripple effect, allowing states to cut company taxes or offer tax breaks and incentives to attract even more entrepreneurial ventures.

Innovation

Many entrepreneurs are innovators. Entrepreneurs, by their very nature, have a risk-taking personality. This means they are more prepared to innovate -- to accept, introduce or adapt new ideas and ways of doing things. This innovation drives economies forward and leads to efficiencies and breakthroughs that contrast with stagnant, depressed economies where innovation and entrepreneurialism is stifled.

Inspiration

Entrepreneurs affect the economy positively by inspiring others to achieve. Entrepreneurs are often very driven, charismatic, successful people who have overcome significant obstacles to achieve something of note. Their example inspires others to seek new ways of doing things and keeps businesses striving to make improvements to better compete. Innovative companies led by inspiring people attract top talent from around the world, thus strengthening the economy where the entrepreneurs work.

Investment

Entrepreneurs generate income and revenues, and much of this income is often invested in the local economy. If their businesses are successful, they will have funds available to invest in other entrepreneurial ideas. They will spend money buying the local products, services and raw materials they need to conduct their own operation. Entrepreneurs also may start or invest in social and charitable works.

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