Shop Small vital to success of mid-market

The month of November has been the focus of a campaign promoting the services of small business. Martin Seward of program sponsor American Express explains the vital role of small business in the community. 

To understand why the First 5000 community of mid-sized businesses should be interested in the plight of small business, you first have to understand the importance of small business to macro-economic prosperity.

A 2012 report for the Australian Bureau of Statistics titled ‘Small Business: An Economic Overview’ stated that 95 per cent of the 2.13 million actively trading businesses in Australia in 2011 were small businesses – defined as having fewer than 20 employees.

The report noted those businesses accounted for ‘almost half of employment in the private non-financial sector’ and while that number wasn’t quantified, there is no doubt the sector is a vital part of the economy through employment, the building of skills and by fostering entrepreneurship and innovation. The Department of Industry tells us that in 2013 small businesses contributed 34% to gross domestic product.

So if small business is in trouble, the country’s macro-economic healthwill also be feeling the strain. This is why it’s important that everyone supports small business and why American Express founded November’s national Shop Small movement. This month-long campaign is asking the entire business community, government and every day consumers to spend in the small businesses in their community.

We believe the bigger end of town has a key role in ensuring the success of the small business economy, and in fact many of Shop Small’s partners are big corporations such as Google, Qantas, Energy Australia and MYOB, which are all playing a vital role in spreading the Shop Small message.

It’s a message that we hope all business will get behind because while Shop Small is about getting everyone to focus on supporting local businesses, we also want people to understand the importance of the sector’s health to all of us.

As part of the campaign we conducted extensive research, which showed that virtually everyone (99 per cent) recognised small business’ importance to the economy and 85 per cent claimed to have shopped at small businesses in their local area at least once a week.

However the frequency of shopping dropped alarmingly, with only 36 per cent shopping locally two to three days per week and a mere 19 per cent shopping at small local businesses most days.

That represents a real challenge for small business: how to channel that high regard into more frequent visits?

There’s no doubting the challenges facing small business are very different to bigger business—cash flow, time and smaller budgets among many.  Small business owners also have to wear different hats and do not have the luxury of a full management team. It is also for this reason, their tenacity, creativity and agility must be celebrated.

The strengths of small business over their larger competitors include the ability to get up close and personal with customers and the capacity to change and innovate quickly based on their customers’ behaviours and needs. Larger organisations can draw learnings from this and adopt a closer proximity to their customer base.

Sadly but not overly surprising, the Shop Small research also showed us that there was something of a generation gap between the younger and older generations regarding how much they valued small business, with 81 per cent of Baby Boomers valuing small business as very important to the local community compared to just 67 per cent of Generation Y.

There are many ways to try and bridge that disconnect but we believe social media is one area where the lessons from large and medium sized businesses can apply to small businesses.

Over the past decade, social media has been enthusiastically adopted by larger organisations as they seek to tap into a highly outspoken and proliferated audience. With some notable exceptions, established small businesses have been slow to utilise social media but it is now beginning to play an emerging part in marketing and contact plans with customers. Proprietors are turning their attention to customer loyalty – planning how to attract new customers, retain them and turn them into brand champions, all by offering a great customer experience.

That’s why we are running a number of workshops through Shop Small which concentrate on digital marketing. The workshops have been very successful but we want to spread the message further to help more small business owners.

With that in mind we are creating a series of podcasts from the digital marketing workshops which explain digital marketing and what it can do for a business. The first of these can be downloaded for free on the Shop Small website shopsmallaustralia.com now.

The website also gives information about how the public and small business owners can get more involved in Shop Small throughout the month.

As one in four Australians either have a family member or a close friend involved in small business, we would encourage you to tell those you know of the opportunity and invite you to spread the message through your own company channels.

And while there are incentives for both the public and owners, the main thing we want people to do is shop at small business.

The survival statistics for the category make frightening reading: only around half of new business start-ups survive the first four years of operation and more than 80 per cent of businesses that filed for bankruptcy last financial year employed fewer than 20 people.

The research showed the public’s main concerns when small businesses closed down in their local community were that the area starts to look run-down (60 per cent), people have to travel further to shop (60 per cent) and there’s a loss of a sense of community (58 per cent).

Job opportunities, a more vibrant community and an increased community spirit were prominent among the benefits of having local small businesses, while 78 per cent of those researched spoke about the promotion of cultural diversity as being a positive effect of small business.

But none of this happens without customers.

Martin Seward is the Vice President and General Manager Small Business Services, American Express Australia.