Small Businesses: Making the World Go RoundChristina Sommer |
Intuitively we all know that small businesses make the world tick – they are where you buy the newspaper on your way to the train in the morning, where you pick up your dry cleaning on your way home and where you share meals with your family. But do you know just how much these small businesses actually contribute to the global economy?
Small and Medium sized enterprises (SMEs) are responsible for creating 99 percent of enterprise and 70 percent of new job creation globally. And this is true of both the developed and developing economies.
If you take Latin America as an example, 99 percent of businesses are small or medium enterprises and these very same businesses employ 67 percent of Latin American employees. Thriving countries like Brazil look to small businesses to drive their economy and future growth – 96 percent of jobs in Brazil come from SMEs.
In the United States the story is more of the same: small businesses make up more than 99 percent of all employers, translating into 40 million American jobs and a staggering $6 trillion in revenues. Even the Chinese government points to small businesses as the growth engine of its future, accounting today for 60 percent of China’s total economic output.
The question is: do we as a banking and payments industry devote the right level of attention to this segment’s needs?
As the daughter of two small business owners and someone who started my banking career in small business lending, I think our industry has a big opportunity — one that we have not yet capitalized on. Serving small businesses is hard; they come in all shapes and sizes. Their needs differ from consumers’ – though many are sole proprietors and have very different needs from their larger counterparts. As a result, banks sometimes struggle with just how to service small businesses effectively.
It is hard nowadays to pick up a newspaper and not read about struggling economies or weaker–than-expected bank earnings. I might suggest that as banks look to increase revenue streams and governments around the world look to strengthen their economies, small businesses are a logical place to begin. Collectively if we can figure out how to help small businesses thrive by promoting more lending, business education and mentoring classes, perhaps we can all win.