In India it is very common for us to talk about big things – big names, big cars, big buildings, big budget movies… We think more in terms of big and get entangled in big talk. Job seekers want to join only big companies. They prefer to be in a trivial role in a big company rather than be in a crucial role in a small company; if someone wants to set up a business, he wants it to be big, even our bureaucrats also define policies that are favourable for big businesses.
In such a scenario, where everything is talked and hyped about big businesses, the small businesses are the neglected sector in India. If small businesses are encouraged and supported it can do wonders in the same way it is doing in the US.
Let’s wait for a minute here and see what the small businesses are doing in a developed country like the US.
Small businesses are the key drivers of employment in the US
Small businesses have the potential to provide employment for a large chunk of people. In the United States of America,
- Two out of every three new jobs created are by small businesses
- Small businesses created almost 70% of all new private sector jobs in 2008 recession
- 42.9 percent of private sector payroll is by small businesses
- 43 percent of high tech employment is by small businesses
- The 600,000 plus franchised small businesses in the U.S. account for 40% of all retail sales and provide jobs for some 8 million people
Looking at these numbers it is very clear that small businesses play a major role in job creation and economic growth. When small businesses can make such a huge impact is US, then I don’t think it is impossible for small businesses in India to do the the same.
India is second populous country in the world with a whopping 120 crore population, half of which are under 25 years of age. Big businesses can never be able to offer jobs to this big chunk of working age population. It is only the small businesses that can do it (like that in US).
Small businesses are key drivers of GDP in US
Non-agricultural GDP from small businesses in US is around 45%. Small and medium businesses account for 98% of U.S. exporters, equivalent to 13.8 % of nation’s GDP. Also in 2008, U.S manufactured exports created 6.8 million jobs. Every strong economy encourages small businesses which contribute to country’s GDP. The 23 million small businesses in America account for 54% of all U.S. sales
Small businesses are the innovators
Whether it is because of necessity, opportunity or creativity, whatever is the need, small business owners are natural innovators. In US, small businesses create 13 times more patents per employee than large patenting companies.
Big businesses cannot survive without small businesses
Every big business depends on multiple micro and small businesses. Right from the supply of goods to outsourcing critical business operations like accounting, recruiting & staffing, billing, advertising, marketing, etc. big businesses need the help of supporting businesses which are usually small. If small businesses are not there, big businesses will struggle to manage multiple things all on their own.
Small businesses offer better service
Because of their vast target markets and product range, it is very difficult for big businesses to satisfy their customers well. But this is not the case with small businesses. Their target market will be small and they offer only one or a few products or services. Thus they will be more specialised in their niche. Most small businesses know their customers personally – this enables them offer better service.
People in America have a positive impression on small businesses. According to a poll by Gallup Organization, 95 percent of Americans have positive view on small businesses. One thing is for sure, without small businesses, American economy would crumble.
Finally, a few points on small businesses
- Small businesses do the hiring
- They take risks and inspire people. When everybody says they will fail, not worth pursuing, some small businesses take the lead since it is not few decision makers who decide everything
- They exist out of will – they have that passion to compete with the big companies and brands
- They are the forerunners of change
- They rejuvenate the local economies
In India, we never give small businesses the appreciation they truly deserve. If our country wants to grow economically, it should have a strong backbone for small businesses. Without the backing of the government and bureaucrats, it’s difficult. It’s time for us to change our attitudes towards small businesses and give them the support they need, so that not only will they excel in their business, but our country will also reap benefits in the form of new job creation and sustainable economic growth.
