Improving the Economy is a Team Sport: Why Supporting Small Businesses is a Prosocial Movement
The success of any team or organisation depends on its culture and collective beliefs. The same is true for the economy. To create a thriving, prosperous economy, we need to work together and support one another, particularly small businesses. Supporting small businesses is not just good for the individual business owner or their customers; it’s good for everyone. When small businesses thrive, they create jobs, drive innovation, and stimulate economic growth in their communities. In this sense, giving credit to small businesses is a prosocial movement that benefits us all.
Shared collective power of a united team
To understand the power of a shared collective belief, we can look to the success of the New Zealand All Blacks rugby team. For 20 years, the team failed to win the Webb Ellis trophy. This is the cup awarded to the winner of the Rugby World Cup held every four years. But in the 2000s, the team’s management embarked on a program to manage their culture and central narrative by attaching the players’ personal meaning to a higher purpose: to unite and inspire New Zealand.
The result was back-to-back World Cup Final wins in 2011 and 2015. By uniting around a shared belief and purpose, the All Blacks were able to create a culture of excellence and success that benefited everyone involved, from the players to the fans.
The same is true for supporting small businesses. By recognising that giving credit to small businesses is a prosocial movement that benefits everyone. Large organisations can create a culture of support and collaboration that drives economic growth and prosperity.
This shared belief in the power of small businesses is not just a personal motivation for individual employees. It is a collective belief that can unite organisations and communities. By highlighting the social aspect of work and emphasising individuals’ concerns about how their actions can affect others’ well-being, large organisations can build a culture of support and collaboration that benefits everyone involved.
Small Businesses Score Big for Australia’s Economy: Here’s how small businesses benefit all of us
Small businesses are a vital part of the Australian economy, contributing significantly to job creation, economic growth, and innovation. Here are some ways in which small businesses contribute:
- Small businesses play a critical role in keeping large businesses thriving. Large businesses often rely on small businesses to provide goods and services that are important to their operations. Small businesses may act as suppliers, service providers, or subcontractors for larger firms. They provide the specialised skills and products that large businesses need to operate efficiently.
- Job creation: Small businesses are the largest employer in Australia, providing jobs to over 5 million people. They are known for providing employment opportunities to people in regional areas, helping boost economic growth and reducing unemployment.
- Economic growth: Small businesses account for more than 35% of Australia’s GDP and over 25% of New Zealand’s. This shows their importance in driving economic growth. They create new products and services, which in turn increases demand and drives growth across various sectors.
- Innovation: Small businesses often have a competitive advantage over larger corporations in terms of innovation. They can respond quickly to changes in market demand and are not restricted by bureaucracy. This allows them to experiment with new ideas and products.
- Tax revenue: Small businesses also contribute to government revenue through taxes and other fees. As they grow and become more profitable, they contribute more to the tax base. This can then be used for public services and infrastructure development.
- Community development: Small businesses are often owned and operated by people who live in the local community. They contribute to community development by creating a sense of identity and pride, providing support to local charities and events, and promoting economic growth in the area.
Why is this important?
Small businesses often face a range of challenges when it comes to accessing the resources and support they need to thrive. One of the most significant challenges for small businesses is securing the financing they need to grow and expand. This is where large organisations can help.
- Insufficient access to financing for business growth: Starting a business requires capital, but obtaining funding can be challenging, especially if your credit score is low or you lack a proven track record in business and finance. This makes it difficult to secure loans from banks or other lenders.
- Difficulty obtaining and affording credit: Acquiring credit can be a challenge for small businesses due to limited credit history and high costs associated with borrowing. This can impede business growth and limit opportunities for expansion.
- Cash flow management issues: Managing cash flow is essential for any business to maintain its financial stability. It is critical to have a system in place to ensure invoices are paid on time to keep up with operational expenses, such as overhead and payroll.
- Decreasing profits due to rising operational expenses: As operational costs rise, profits can decrease, putting businesses in a vulnerable financial position. Small businesses may face challenges in finding affordable suppliers for raw materials, labour, shipping, and utilities, which can eat into profit margins. It is important to negotiate the best rates and stay realistic about what the business can afford.
The Assist: How Large Organisations Can Help Small Businesses Access Trade Credit
By offering trade credit to their small business customers, large organisations can help them access the working capital they need to purchase goods and services, cover their operating expenses, and invest in their businesses. Trade credit is an arrangement where a supplier extends credit to a customer to purchase goods or services, with payment due at a later date.
For small businesses, trade credit can be a lifeline. It provides them with the cash flow they need to keep their operations running smoothly. However, accessing trade credit can be a challenge for small businesses. They often have limited credit histories or may lack the collateral needed to secure a loan.
Large organisations can help by offering fast, cheap, and accessible trade credit to their small business customers. This can include offering flexible payment terms, such as longer repayment periods or discounts for early payment. Large organisations can also offer financing options that are tailored to the needs of small businesses (for example invoice financing or revolving credit facilities).
In addition to providing trade credit, large organisations can also help small businesses navigate the complex landscape of procurement and supplier management. Small businesses may face significant challenges in meeting the procurement requirements of large organisations, such as complying with quality standards, meeting delivery schedules, and managing inventory levels.
By providing guidance and support to their small business customers, large organisations can help them overcome these challenges and build stronger, more resilient supply chains.
Winning together: We’re determined to make B2B trade faster, easier, smarter and trusted using tech
One organisation that is helping small businesses access the financing and support they need is 1Centre. 1Centre is a cloud-based platform that connects small businesses with approved trade-credit from their suppliers.
1Centre is a cutting-edge Trade Credit platform that empowers businesses to manage their credit risk and streamline their trade credit application process. By using the latest technologies, including real-time business credit checks, ID verification, guarantees, and trade reference checks, 1Centre enables businesses to process trade credit applications in minutes instead of days or weeks. Trusted by leading organisations in New Zealand and Australia, including Mitre 10 New Zealand, CSR Group, and Bidfood New Zealand & Australia, 1Centre is dedicated to empowering businesses to trade confidently and efficiently.
In conclusion, small businesses are the backbone of many economies around the world, including Australia. They create jobs, drive innovation, and contribute to local communities. To succeed in the competitive world of business, it’s important to stay grounded, work hard, and never be too big to do the small things that need to be done. As rugby legend Richie McCaw once said, “never be too big to sweep the sheds.” Just like in rugby, success in business depends on teamwork and a willingness to contribute, no matter how small the task may seem.
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We’re offering a free business plan that outlines your internal proposal to adopt a Trade-Credit Customer Onboarding Platform. Click through to the article below to access.