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SMEs drive Australia economy
By Oren Laurent
President, Banc De Binary
American Express launched its Shop Small campaign across Australia this month to promote small businesses and encourage customers to support their local communities. In today’s world of mega-markets and chain stores, can small businesses really still make a valuable contribution to developed economies? Let me explain why the answer is a resounding ‘yes’.
Far too often we underestimate the power of small businesses; after all, it is easier to buy fresh bread, shampoo, towels, meat and light fittings in one go from the same store. Yet they are a vital ingredient for a nation’s strong economy. When we talk about small business, this can refer to almost any type of enterprise from hairdressers to coffee shops, from manufacturers to cleaning services.
In Australia, around two million such businesses contribute significantly to the economy, providing goods for the local population and exporting overseas. Together, they are the country’s biggest employers. Thanks to government infrastructures which support the free market economy, Australia was ranked in 2007 as the second easiest economy for a new businessman and the third easiest country to get credit for a business. A poll revealed that 58% of Australians believe small businesses play a role in the local community’s identity, while 45% think that they offer better customer service than retail giants.
Australia is certainly not the first to enjoy the Shop Small campaign, nor is it the only economy in which small businesses play an important role. The movement began in the US, and has already spread to several countries including the UK, Canada and Hong Kong, gaining momentum and public awareness along the way.
According to Industry Canada, small businesses now represent 43% of jobs created in the private sector and over 100,000 new small businesses are opened annually in the country.
In Britain, 99% of businesses are classified as small, with fewer than 50 employees, and they add to the diversity of the country. Together, they employ almost half of the workforce and contribute a quarter of the UK’s wealth. Plus, small and medium sized firms are consistently shown to be more willing than huge enterprises to take on apprentices and to offer flexible work options for parents.
We can pinpoint the increased attention to small businesses to the 2008 global financial crisis. As consumers cut spending in the wake of the crisis, smaller companies struggled more than their larger rivals to stay afloat while also offering competitive prices. This promoted the launch of Small Business Saturday in 2010 in the U.S. to give a boost to small businesses, making consumers more conscious of the long-term impact of their purchasing decisions on their communities.
At the same time, the recession presented new opportunities. Out of the many victims of corporate downsizing, who found themselves suddenly unemployed in a dead job market, some decided that this was the time to be proactive and start their own business. Those successful in their new entrepreneurial roles created job opportunities for others outside of the large corporate world, and have been instrumental in helping to reinvigorate economic growth.
Small businesses may not command the media attention and influence of giant chain stores, nor do they generate the same level of revenues. Yet they are the rocks of our societies, they employ a huge percentage of the population and provide unique services that add to our varied experiences. They deserve the attention they are now receiving. Countries that make the success of small businesses a priority will likely be the most prosperous in the next decade, as we all seek to turn our backs on the recession for good.
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