How the Government Can Support Startups and Small Businesses
And Why They Have to Do It
As startups begin to get more popular, there are more and more people and organizations getting involved in the business. These people and organizations can include venture capitalists, bankers, and consultants. These organizations support a startup by helping to create a viable environment for the business to grow and prosper.
There are many ways that governments can support a startup. Governmental support is most effective when it is targeted at specific areas of interest for the business as well as those individuals who are contributing to the success of the company.
For instance, if a government is interested in growing and supporting research and development within their own country, they should consider funding these types of initiatives as well as funding businesses that focus on this area of research and development. Governments should also consider funding those companies that focus on international markets as well as small businesses that want to expand into international markets.
If a government does not have an interest in any particular area, they should consider giving general funds or tax credits to small businesses that are looking to grow internationally or providing incentives for small businesses that provide job opportunities for those who live in their area. Incentives can be provided through tax credits, loans, grants, or by purchasing stocks or other securities.
Governments can also support startups by providing the infrastructure that allows the company to succeed. If a government is interested in supporting startups in their own country, they should consider helping to create a conducive environment for growth by building roads and transportation networks, making sure that there are ample job opportunities for their citizens, and ensuring that their regulations are friendly to small businesses.
The idea of supporting businesses with funding is nothing new. Governments all over the world support businesses with loans and grants. There were three primary arguments made in favor of government support for startups:
1) Start-up founders do not have enough experience and capital to run their companies.
2) Start-up founders can fail and need support.
3) Governments can promote social goals through supporting entrepreneurs.
Here are several ways the government can help startups and small businesses to grow:
Zero-Interest Loans
The government can provide zero-interest loans to start-up companies. These loans can be provided in the form of grants or tax credits and do not need to be repaid. This can help startups to take on debt and make their first purchase. A zero-interest loan can be used to buy equipment or inventory that will provide immediate value for the business. It can also be used to hire employees and for expansion purposes.
Grants
The government can provide grants to start-up companies to help them expand. Grants can be provided for a specific purpose such as infrastructure development, transportation, or training. The funding can be provided in the form of loans or tax credits and the funding does not need to be repaid. This is similar to zero-interest loans in that it helps startups take on debt and get their company off the ground. Grants are also helpful for expanding into international markets because they can help businesses obtain licenses and permits for exporting products.
Business Training
The government can provide business training for entrepreneurs by providing workshops, seminars, and courses. Training programs will teach an entrepreneur how to use business skills such as finance, marketing, management, etc., so that they are able to run their business effectively once they begin working in their own company. Business training programs will also help entrepreneurs understand what kind of products and services they should be selling in order to make the most money possible. If the government has its own expertise on how to start a business or what kind of products should be sold by a business, then it is better if they teach these skills rather than an outside source like a consultant or consultant group (such as professors).
Access to Venture Capital Investment
The government can provide start-up companies with access to venture capital investment. This is especially helpful for businesses that want to expand into international markets or for small businesses that want to expand into international markets. Venture capital investment will allow a business to take on debt and get their company off the ground and will also allow them to take on additional debt and expand their business once they have achieved some success. Venture capital investment can be provided in the form of loans or tax credits and does not need to be repaid. It is also important for the government to make sure that venture capital investments are targeted at the areas of interest for the government as well as those entrepreneurs who are contributing to the success of the company.
Government Contracts
The government can provide start-up companies with contracts to perform a service for the government. These contracts can be provided in the form of loans or tax credits and do not need to be repaid. Government contracts are also helpful for small businesses that want to expand into international markets because they can help small businesses obtain licenses and permits for exporting products.
Conclusion:
The government can support startups and small businesses by providing loans, grants, and contracts. These forms of support are helpful for entrepreneurs to take on debt and get their company off the ground as well as providing an opportunity for them to expand once they have achieved some success. These forms of support are also helpful for small businesses that want to expand into international markets because they can help small businesses obtain licenses and permits for exporting products. Governments should consider providing funding to those companies that focus on international markets as well as those small businesses that want to expand into international markets.
About the Author
I am the Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students learn better. I am also a mentor and angel investor in other Startups of my other interests (Proptech, Fintech, HRtech, Ride-hailing, C2C marketplaces, and SaaS). You can also find me on Cudy for early-stage Startup Founder mentorship and advice.
You can connect with me on Linkedin (https://www.linkedin.com/in/alexanderlhk) and let me know that you are a reader of my Medium posts in your invitation message.
