By Mark Estall, CEO and co-founder of 9 Spokes.
It is well known that small and medium size businesses (SMEs) contribute a large proportion of revenue, employment and innovation within an economy. In the United States, SMEs make up about half of the country's US $18 trillion economy and were responsible for 65% of new private sector jobs in 2014. SMEs in the UK employ over 15 million people and have a combined annual turnover of £1.8 trillion. And in Australia, small businesses employed approximately 4.5 million people in 2013, making up 43% of private sector employment.
The importance of small businesses to local economies is highly recognised. In 2012, President Obama stated, "From the mom-and-pop storefront shops that anchor Main Street to the high-tech start-ups that keep America on the cutting edge, small businesses are the backbone of our economy and the cornerstones of our nation's promise".
It is clear that if productivity in the SME sector can be increased by a few percentage points, there will be a large benefit to overall economic growth.
The great news is that plenty of private and public sector initiatives are aimed at SMEs. Many of these initiatives focusing on the smallest and newest SMEs provide mentoring, guidance and financial support to get them off the ground before they need to deal with business-as-usual realities. However, after 30 years as an entrepreneur, I have had questions regarding these initiatives, as the success rate is not spectacular.
Many SMEs have aspirations to just be self-employed for lifestyle choices or have financial independence, while others are motivated to build successful, scalable businesses. Both require the same guidance and support from the beginning. Managing cash, sales, people and inventory is the key to any business's success and without this competency, a SME is destined to struggle. Well established businesses have mastered these basic concepts and can begin refining their proposition to enable growth.
SMEs have access to cost effective tools and advisory services like never before. The public and private sectors are putting these tools into the hands of start-up SMEs. Statistics show that they are adopting these tools to help them overcome these initial hurdles and move them to become sustainable businesses. The focus on start-ups would reap significant rewards to economies, given the large numbers of new start-ups each year.
Focusing on already established SMEs with proven sustainability can drive the largest reward to the economy. These businesses are sound, they have experience and they have resources to grow. What they need are business tools and accurate information to support their decision-making. Business intelligence from online software can be a quick and cost effective way for SMEs to obtain this information quickly. With key data and insights on their businesses, they can identify opportunities to drive change and growth within their business. In the long term, this will contribute positively to local economies.