The Importance of Small Businesses Throughout History

The Importance of Small Businesses Throughout History

When an international team of researchers set out to analyze sediment cores extracted in southern Greece, all their previous theories went out of the window.

It turns out that marketplaces composed of smaller sellers prevailed in Greece dating back to as early as 1,000 BC. The researchers identified a significant agricultural and grapevine production shift around this period with evidence pointing toward a thriving small market economy. These smaller and medium-scale merchants were wine sellers, cereal merchants, pottery dealers, and jewelers.

The rise of these independent merchants correlated strongly with an increase in the overall prosperity of the people.

Civilizations embracing free trade enjoyed broader population-wide engagement as trade benefits were distributed amongst the citizens rather than concentrated in the hands of kings, pharaohs, and emperors.  These civilizations also witnessed safer life, better health, less poverty, and broader civic engagement.

While researchers widely believe ancient Greece to be the biggest trade economy in early history, it isn’t the only region that had a massive impact on a global scale.

Let’s turn back time and retrace some of the oldest trade economies in history that shaped the world as we know it today, and show how empowering independent merchants and smaller-scale sellers was the backbone to most successful economies in history.

Ancient Egypt (6,000-3,150 BC)

Historian James C. Thompson uncovered strong evidence suggesting the existence of internal trade between Lower Egypt and Upper Egypt and also between individual districts of these two regions. Small and medium traders dealt in selling and exchanging ivory goods, gold jewelry, wooden products, and clothes.

During this time international trade with Mesopotamia — ancient Egypt’s earliest trade partner — boomed. Experts and historians routinely observe a distinct Mesopotamian influence on Egyptian art and culture.

The quality of life of the Egyptians improved

Ancient Egypt possessed many natural resources, but they lacked in luxury goods. They acquired these items via international trade. It wasn’t until the Persian Invasion in 525 BC that currency was introduced, with trade prior conducted via barter.

To acquire these luxury goods, Egyptians offered goods in return, with small and medium traders rising to fill this need. They produced linen garments, utensils, and furniture. The only reason ancient Pharaohs and people of Egypt enjoyed luxury items is because small and medium traders made ongoing exchange possible, bolstered by the occasional trade mission between the rulers of neighboring kingdoms. Without the support of these smaller traders, the entire way of life enjoyed by Pharaohs and regular people could not exist.

The idea of unit currencies originated in Ancient Egypt

With markets in this period running on the barter system, value was measured in a unit called a “deben.” A deben functioned much like our modern currencies, except debens had no physical form — no coins, no bills. Historians estimate one deben was roughly equivalent to 90 grams of copper, and traders would assign a price accordingly. Traders and the public exchanged goods with a similar “deben-value” item. For instance, linen garments worth two debens would buy a chalice worth two debens. Only such an exchange was considered a fair trade. Many experts believe the concept of “deben” is one of the earliest recorded pieces of evidence evolving into the idea of currency. With a standard value of currency established, and a high volume of exchange taking place, smaller sellers thrived with more optimal business conditions.

Indus Valley (3,300-1,300 BC)

The Indus Valley civilization, or the Harappan civilization, lasted approximately 2,000 years. But it didn’t truly prosper until 2,600 BC, with the establishment of trade and agricultural marketplaces. As more people embraced agriculture, they came up with advanced farming and irrigation methods, including plows and irrigation.

Agricultural traders mass-produced crops such as millet, sesame, and rice in the summers and wheat, barley, and lentils in the winters. Initially, they traded produce with the Harappan people and with neighboring peoples; leading to the rise of import and export traders.

Importers and exporters acted as the conduit between the Harappan agricultural traders and foreign traders. They imported jade and cedarwood from China, copper and lead from Ancient India, and minerals and oils from Afghanistan and Iran.

Recent discoveries suggest the Harappans were savvier than previously believed; trading ornaments made from seashells, pearls, stones, terracotta pots, and gemstones such as lapis and lazuli. At its zenith, the Indus Valley civilization was one of the wealthiest civilizations in history — with Harappan traders engaging in a free trade laissez-faire style economy.

Increased focus on hygiene and sanitization

With booming internal and international trade, the Harappans quickly prospered. Archaeologists today keep making stunning discoveries about the breadth and the scope of their prosperity every time they unearth the remnants of the Indus Valley civilization. This prosperity improved the quality of life of the Harappan people as demonstrated by the discovery of a vast network of urban sanitation systems.

The Harappans invented an advanced network of sewage and drainage systems centuries ahead of its time. It’s believed to be the most advanced sanitation system among all ancient civilizations; excelling in managing safe drinking water and disposing of wastewater. Evidence that the Harappans held cleanliness and hygiene in high regard. As a result, the Indus Valley civilization saw fewer illnesses and endemic diseases than other civilizations of its time.

Thank the Harappan traders for cakes and pizzas

Agricultural merchants grew and traded produce such as barley, wheat, sesamum, grams, beans, and other pulses. People enjoyed a variety of foods and experimented with cooking methods and techniques. Archaeologists have discovered underground and overground circular pits —ovens — covered with silt and plastered with lime. The Harappans knew how to make bread.

Scholars have debated from time immemorial the true origins of bread. Some believe bread-making originated in Indus Valley; some say it was the Egyptians; while others believe the Mesopotamians invented bread. But Harappan ovens pre-date both the Egyptian and Mesopotamian civilizations by some 1,500 years. So, the idea that Harappan traders exported both the ingredients and methods necessary to bake bread isn’t far-fetched.

Ancient Greece (800-480 BC)

The Ancient Greeks represent the next major milestone in economic trade with their exponential growth in international trade circa 650 BC. Following the Greek dark ages of 1200 to 800 BC, the Greek city-states emerged. Bolstered by currency in the form of coins, standardization of weight measurements, advancement in shipbuilding technology, and the establishment of safe seas — ancient Greek traders went all in to increase their volume of exports. The Greeks traded with Egypt, Asia, Cyprus, and Mediterranean countries, exporting olives, wine, pottery, metalworks, and gold jewelry. Traders sailed across the seas to Arabia, Egypt, Tunisia, and India bringing papyrus, linen, spices, and silk back home to Greece.

The emergence of democracy in the Greek city-states diffused power among the citizens. This restricted the concentration of power, preventing any one person from take control, ensuring prosperity for a broader portion of the populace, and preventing the rise of kings and tyrants until the rise of Alexander the Great.

The rise of money lenders

As trade expanded and Greek affluence grew, they found themselves sitting over a considerable surplus of money. While the emergence of lending is disputed, Greek traders leveraged lending to transform the global economy. They started leveraged trade loans to facilitate trade, enabling merchants to grow their businesses at a much faster rate, something that is still utilized to this day. Small and medium traders borrowed money from this newly risen class of lenders and went overseas to purchase products.

Traders could use maritime loans to pay for their cargo with interest rates ranging from 12-30%. These loans provided insurance as they didn’t require repayment for cargo lost due to shipwreck. While traders paid fees to get access to this capital, the overall benefit and security to growth and safety of their business was easily worth the small cost.

Roman Civilization (509 BC-476 AD)

At one point in history, Ancient Rome was the epicenter of global economic activity. The Roman civilization saw hundreds of thousands of small and medium businesses thriving throughout its reign.  Rome used a single currency system that made trading simple and easy. France, Britain, Spain, North Africa, and the Middle East were their main import partners, and they primarily imported products such as olive oil, wine, timber, marble, leather, tin, precious metals, glass, iron, and lead. At the same time, the Romans would send goods including perfumes, olive oil, pottery, papyrus, gold, and wine.

Rome witnessed a meteoric rise of small and medium manufacturing businesses. While the Roman aristocracy looked down upon manufacturing, early craftsmen began employing more workers and significantly scaled production.  It’s our perspective that these Roman freedoms and opportunities enabled the plebeian classes to act as a counterweight to the patrician classes represented in the Senate. Effectively diffusing power amongst more people via the economic might of the small and medium business owners as a class.

Merchants turned Rome into a sophisticated economy

As trade routes expanded through the Mediterranean, piracy followed. Merchants developed land routes to transport goods between countries. Rome’s leaders saw the value of roads facilitating trade and the movement of Roman armies. It wasn’t long before a massive road network at their disposal to move the goods and transformed Rome into one of the most bustling and advanced economies of its time. The most famous road, the Appian Way, connects Rome to Brindisi, supporting trade routes east of Rome via the Adriatic port city of Brindisi.

These roads enabled the creation of early postal services. These postal services spread the message of Christianity via the Apostle Paul’s letters to the Corinthians, Romans, and more.

As people used Roman roads to travel, migration increased, with an influx of people moving into Rome from other countries. This population movement fueled urban growth and the expansion of territories. At the peak of the ancient Roman civilization, the population breached the million mark.

The importance of small businesses today

If there is one thing that the modern world shares with previous civilizations, it’s this — small businesses are the cornerstone of a buoyant economy. Countries with the highest GDPs have historically seen significant contributions from small and medium-scale businesses. Small businesses provide a counterweight to the powerful and politically connected. While few small businesses owners rise to fame, their combined power moves economies, lifts entire populations from poverty, and spreads freedom and opportunities to neighboring countries.

Statistics speak for themselves

You only need to look at these recent statistics to understand the extent of their contributions:

  • The World Bank states that approximately 445 million micro, small and medium enterprises exist in the world — most in emerging markets.
  • 70% of all small businesses have a single owner.
  • 64% of small businesses started with working capital of less than $10,000 and grew with the help of affordable business loans.
  • In just the US alone, there are 32 million small businesses — almost 99.9% US businesses.
  • A whopping 97.5% of total exporters in the US in 2020 were small businesses.
  • Small businesses employ 47% of the total US workforce, with approximately 60.6 million employees.

Final word

More than ever, small businesses create the path to prosperity, to safe, healthy and stable communities, and create opportunities around the world. Whether it's an online store, a brick-and-mortar outlet, an investment agency, or a digital marketing firm — small businesses drive the economy. If you are a small or a medium business owner, you’re a part of tradition of expanding freedom and opportunities for your neighbors near and far. History proves that freedom thrives far and wide the more small businesses grow and prosper. Small businesses drive economic prosperity.