One third of Australian small business operators fear they risk becoming insolvent in the next three to five years, according to a national survey.
The Economy of Shopping Small Report, commissioned by American Express included a survey of 864 small businesses and 1,000 consumers, undertaken by RFi Group. The report explored insights from both consumers and small business owners to understand the state of small business in Australia.
The report found frequency of spend in small businesses has fallen by 12 per cent over two years among those who shop at least once a week at a local shopping village – 82 per cent in 2016 versus 70 per cent in 2018.
This has led to three in five small businesses reporting flat or declining revenue growth year-on-year. The report also comes at a time when 59 per cent of consumers don’t believe their shopping habits have any impact on the success or failure of small businesses.
Consumers acknowledged their shortcomings, with 86 per cent admitting they could step up and do more to support small businesses.
However, the majority of shoppers claimed to have good intentions.
This was revealed in the two-thirds of shoppers who said they feel a responsibility to support local businesses and the growing number who said they prefer to shop in a small business ahead of larger retailers, 53 per cent in 2017 vs. 65 per cent in 2018.
The report coincides with the Shop Small initiative, founded by American Express to encourage consumers to shop at small businesses during November. The initiative aims to shine the spotlight on the importance of small businesses and encourage Australians to support them.
Australian Small Business and Family Enterprise Ombudsman, Kate Carnell describes the sector as the engine room of the economy.
“By shopping locally – at your corner grocer, café, pharmacy, bakery or hairdresser – in November, you will be supporting grassroots growth and community engagement, to ensure the engine room is firing on all cylinders,” Carnell said.
“Running a family or small business demands passion, dedication and a real focus on the customer; giving them an enjoyable experience. If we get that balance right, small businesses will be able to realise the benefits of competitive participation and economic growth.”
The report revealed that the strongest backers of small businesses are more likely to be male consumers over the age of 45 living in New South Wales or South Australia.
Those who own a small business themselves or have a family member who works for one, are more likely to back other independent small businesses, suggesting they support one another.
Family has been revealed to be the hidden backers of many small businesses with 57 per cent of owners having a relative working with them in some capacity. 11 per cent said that additional family members step in during busy periods or staff shortages.
“This research is a timely reminder that none of us can take small businesses for granted and that every dollar spent with a small business counts,” American Express vice president of small merchants, Lisa Belcher said.
“Each and every one of us can make a difference by ensuring ‘shopping small’ is part of our regular shopping routine.”
The report also revealed that when it comes to government support, many small businesses are missing out on the resources available to them. Just eight per cent have accessed government resources, grants or training during the past year.
Pointing to this low result is a lack of awareness amongst small businesses about the assistance on offer – only 15 per cent rated themselves as very knowledgeable about the Federal Government support available to them.