Saturday, September 25, 2021

Why Small Business is Great for The Economy

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It’s interesting how buying behaviour works and how it can affect the economy. A lot of the time our decision to buy something is based on the brand or the place we purchase it from. This is especially true when it comes to small Australian owned businesses; how many times have you chosen to buy something or use a service form a small Australian business over its large international competitors? It often boils down to the feeling of making a difference, regardless of if you’re aware of it or not, you probably choose an Australian business because of that feeling. Everyone is told that supporting small business helps the economy, but how many of us actually know WHY it helps the economy?

 

They Provide Jobs

Small or big, businesses need employees to carry out their functions. Surprisingly, small businesses are the largest source of employment in the country; it’s these businesses that are responsible for about half of all jobs, other than the financial sector. Basically, small businesses help the economy simply because they provide a lot of jobs, more jobs reduce unemployment and that makes for a strong economy.

 

There Are Lots of Them

As well as being a big employer, there are loads of small businesses operating in the country. Small business accounts for 94% of all businesses in Australia, with 2.1 million currently trading. Statistics show that 35% of all value produced in the country comes from small business. This shows how much small business impacts the Australian economy, and how much good it does.

 

They Create Competition

Sometimes markets come to a stand still, especially if there is a big company without much competition. This means that the sector is less likely to develop and innovate. When a small business comes along and offers similar products or services at a reduced price, other companies in that area are forced to compete. This makes the market more active, and will encourage businesses to come up with new ideas to retain their customers. An active, competitive sector producing lots of new products is great for the local economy.

 

They Have Less Debt

People talk about small businesses getting themselves into debt so they can start up like it’s a fact, but this is untrue. With only 40% of small businesses being in debt compared to larger businesses 60% debt rate, The Reserve Bank of Australia found that small businesses are generally in less debt than larger companies. This shows that small businesses are more aware of their finances and are often more careful when taking out loans. With less to pay off, these businesses have a higher profit margin, which is again good for the economy.

 

So there you have it, a brief explanation as to why small business is good for the economy. We should be proud to be the home of so many successful, innovative small businesses that provide jobs for so many Australians. So next time you’re shopping, or looking for a service, remember that when you support a small Australian business, you are actively supporting the Australian economy.

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