At Collaboration, we know that Small businesses play an important role in any society. They are breeding grounds for experimentation and innovation.
The companies that survive over time provide economic stability for owners and their families and become the new benchmark for other new businesses. It is a constant cycle of development and improvement. Small businesses also create jobs.
In a small country such as New Zealand this is key. In creating jobs in smaller towns such as Wanaka, small businesses provide individuals the luxury of excelling in a field they are passionate about without having to live in somewhere like Wellington or Auckland.
But jobs and economic stability are only a small part of why we at Collaboration care so much about helping small businesses.
Here are our top 5 reasons why small businesses are so important:
1. Small Businesses Mean Happy, Healthy Communities
With New Zealand’s rapidly expanding population, more people are choosing to move away from the expensive hustle and bustle of larger cities to more affordable, smaller towns. Small business owners who are willing to take on the risk of providing services and products at lower profit margins are the people who make this possible. And believe us, running a small business in a small town is no mean feat! With constant pressures from new competitors (both large and small), small business owners often drive change within communities through improving their services and products to keep ahead of the competition. This means better service and better quality products for the local consumers.
2. Local Businesses Keep Profits In New Zealand
We’ve all heard the stories. A small town has a number of healthy, local businesses that are all working together wonderfully and then a big, international competitor enters the arena. Without the funds to compete with the corporate giant on price and product, the small businesses get usurped and profits that were previously being invested back into the local community are now syphoned out of New Zealand to fund projects half way around the world. Simply put, small businesses support other small businesses, who all support New Zealand’s economy. Small businesses are a win-win for New Zealand.
3. Small Businesses Benefit Everyone, Not Just The 10%
Just as with most places the world over, living in New Zealand seems to be getting more expensive every year, with the gap between rich and poor getting ever broader. Whilst globally the 8 wealthiest individuals account for half the rest of the world’s combined wealth, in New Zealand the richest 10% own half of the country’s wealth. Now, it might be easy to point the finger at capitalism, but the truth is slightly more complicated than that. Capitalism is also the cure for this predicament and small businesses are an important ingredient in the antidote.
Consider large supermarkets and department stores that stock a wide variety of goods and services at the ‘best’ consumer rates. How many small businesses did they have to undercut to take their seat at the top of the table as the ‘go-to’ supplier for x, y and z? Previously any number of small businesses would have supplied their local communities with these goods. In doing this, small businesses helped share profits amongst each other and the local communities. Employees and owners see direct benefits as small businesses grow. Within large corporations, upper management tend to benefit from increased business performance, but workers at the coalface rarely see any of the spoils.
So, how to address this problem? Firstly, we can become more mindful of where we spend our money. Unless it is absolutely necessary, think local and buy local. Be proud to spend a bit extra knowing that the money you spend today will be re-invested into your community tomorrow.
Secondly, small business owners – unite and fight! In almost all cases, a larger competitor will be able to undercut you on price. But, it’s not the end of the world. You still have the benefit of playing on home turf. Find your unique voice, the niche that makes your business so good. Use your local relationships and knowledge to find out what will make your customers stay loyal (and even steal some customers back from the giants). Beat them on service. Beat them on experience.
4. Small Businesses Lead The Way With Innovation
Whilst larger companies would have you believe that they are the ones bringing out all the latest tech and innovation, the reverse is often true. The bureaucracy that comes with shareholders and large sums of money simply makes it too tricky for real risks to be taken in large businesses. You only have to look at a list of businesses that started in garages to know this to be true: Amazon, Apple, Hewlett-Packard, Google and many others. What makes small businesses so important is the fact that they in reality are able to set the bar for larger corporations. Small business owners have the time and inclination to keep ahead of their larger competitors – improvements in services and products are driven by small business.
5. Small Businesses Will Become Big Businesses
Of course, we now come to the crux of it. Successful small businesses end up becoming successful big businesses. And, for all the seemingly negative comments made about big business in this post, there’s no denying that large businesses do benefit the economy and, in turn, the country and its people. Large businesses employ lots of staff, train skilled professionals and encourage international trade. Often, they also provide smaller companies with the leg-up they need to get their innovations off the ground.
However, what lies at the heart of the matter is that for there to even be a large business, there needs to have been a successful small business at the start. And that is why it is so important for small business owners to seek out and be offered the knowledge and support they need to succeed. It is a sad statistic that of new small companies in New Zealand, between 69% – 45% will fail in their first five year of trading. Consider all the lost opportunities and innovations that could have been born out of these businesses?