Goods, services, innovation and job creation are the foundations of a healthy economy. In Australia, we rely on the entrepreneurial strength and character of small businesses to deliver these precious resources.
Small businesses sustained our economy in the aftermath of the mining boom and account for almost half of employment in the private non-financial sector, according to the Reserve Bank of Australia (RBA). Overall, about a quarter of Australians work for a small business, which by definition employs 20 people or less.
Big economic output
One of the most important signs of the economic force behind Australia’s small business sector is the sheer number of companies that fall into this bracket. There are 2.1 million actively trading businesses in the country, with 97 per cent having fewer than 20 employees, according to the Australian Bureau of Statistics (ABS). Small businesses account for a significant chunk of the economy – 35 percent of all value generated in Australia and a fifth of the nation’s gross domestic product, according to the RBA.
Small businesses are innovators
Many of the most innovative ideas in Australian business come from small enterprises working hard to change their industries.
According to the Organisation for Economic Cooperation and Development (OECD), the contribution of small businesses to innovation has increased considerably in recent decades, with new technologies lowering the barriers that traditionally prevented their entry into larger markets. The ABS reports that small businesses account for around a third of research and development in Australia.
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Small businesses are large suppliers
Anyone selling products and services to organisations will notice just how much buying power the country’s small businesses have. The depth of services small businesses provide allows them to offer the resources other small firms, large companies and the government rely on. The Commonwealth has increasingly procured services from small businesses as a way to boost the growth of these companies and the overall economy.
Big contributors to the community
Small businesses make a big impact on the community, and not only in economic terms. According to Philanthropy Australia, 99 per cent of small to medium-sized enterprises (SMEs) donate their time, money, goods and services to charitable causes.
From 2015 to 2016, SMEs donated $8.5 billion to community organisations. Common reasons cited for donating include the need to demonstrate commitment to the local community and a personal connection to a cause.
Small businesses turn into big businesses
Many of today’s small businesses will be tomorrow’s industry leaders. For the Australian economy to grow, it will need more small companies pushing the boundaries, and expanding their strategies and resources, to turn big ideas into industry initiatives.
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2. Cash flow problems and solutions
3. How to secure a small business grant
4. The 9 most popular sectors for start-ups
5. Does accounting software improve cash flow?