Small businesses represent the beating heart of the Australian economy. Their contribution allows for economic growth and wellbeing. The health of the economy relies heavily on small operations and their hardworking owners and employees.
Small and Family Enterprise Ombudsman Bruce Billson said, “Vitality in the small business sector is really central to jobs growth, innovation and economic prosperity.
“[They are] essential to the Australian economy. Ninety-nine per cent of businesses in the economy are small.”
Large corporations often overshadow the strong impact of the little guys on the Australian economy. By and large, the focus of government and the media is on the affairs and wellbeing of Australia’s large companies. But around every corner, we find vital small businesses overperforming when it comes to employment, innovation and community contribution.
Contribution to Employment
The small business sector makes a significant contribution to employment. Employment indicates how many people can actively participate in the economy, both as producers and consumers. It also shows the general well being of the population. Employment would suffer without small businesses.
“[Small businesses] employ two in every three Australian workers in the private sector,” said Mr Billson. “They’re vital for economic growth, prosperity and livelihoods right across the continent,”
Not only is small business important for Australians securing jobs, but also for creating new employment opportunities. When compared to larger organisations, small enterprises have a greater ability to create new jobs. Job growth indicates overall economic growth and small businesses’ capacity to create new jobs drives economic growth.
“Small businesses punch above their weight in terms of jobs recovery. It’s important to realise at this time that, while small businesses make up two-thirds of the private sector workforce, according to the most recent figures available to us, they generate three-quarters of new jobs in the economy.
“Small business is a jobs powerhouse, a vital element of vibrant communities and essential to the Australian economy and workforce,” said Mr Billson
Capacity to Innovate
When it comes to innovation, small businesses lead the way because innovation is essential to maintaining a competitive edge.
The capacity to problem solve and create efficiency is more significant in small operations too. With fewer moving parts, a smaller company can create something new much faster than their larger counterparts. Innovation and problem solving is what drives economic growth and prosperity.
“Small business is Australia’s powerhouse of innovation. Because they are a crucial source of problem-solving that amounts to business opportunities,” said, Mr Billson
In terms of innovation, small businesses make the first move. The outcomes of successful innovation then move up through the economy, to be adopted by larger organisations. It is this process that creates greater economic efficiency.
Mr Billson said, “Small business is where some of the more creative minds innovate. There is freedom from some of the restraints that you’d find in large organisations.
“You see this because bigger organisations drive innovation by acquiring or embracing technology insights and new ways of doing business pioneered by a smaller business.”
Community Impact
Behind each small business statistic, there are hardworking individuals contributing to their community. Because of their size, they are more in touch with society, community and customer needs, which makes them a perfect platform to foster economic well being.
Mr Bilson continued: “Vibrant local communities need livelihoods, and livelihoods are everything small business is about. Not only for livelihoods for the business owners and leaders but also so many in the local community. Young and returning workers get early opportunities through local small businesses.
“Small businesses also are part of the community and are very prominent in local schools, sporting clubs and community activities. Small businesses are inculcated into the life of small communities. That’s why their impact goes well beyond their economic importance.”
The impact of COVID-19 has shown just how important small businesses are to the economy. They are the first to suffer from an economic downturn and the first to put the pieces back together. As they are often the front line of customer interaction with the economy, they have tremendous power to recover the economy after a downturn.
“I think there has been a reawakening of appreciation for small business during COVID. Customers and local communities have really taken a second look at the local small businesses with a new appreciation of how important they are for vitality and community wellbeing,” said Mr Billson.
Read more: Government assistance for COVID-19 impacted small businesses: Do you qualify?
Read more: Australia facing its worst economic contraction in history
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
