Small and medium-sized businesses (SMBs) are the glue that holds our global economy together.
In America, SMBs make up 99% of all firms and employ 58.9 million people, which is nearly half of America’s private workforce. In the European Union (EU), SMBs represent approximately 99% of the total businesses in the country. They account for 85% of new job creation, which is over half of the EU’s private sector. Entrepreneur India states their number of SMBs is an estimated 42.50 million as of 2020, forming a total of 95% of the total industrial units in the country.
SMBs generate approximately 17.4 trillion dollars annually, which is half of all global revenue. That number alone is awe-inspiring and why the Markaaz team works daily to connect every small business on the planet!
SMBs have specific strengths and weaknesses that require unique solutions. As new technologies and globalization reduce the importance of economies of scale in many activities, the potential contribution of smaller businesses is stronger, with many of them being leaders of innovative solutions. However, many of the traditional problems facing SMBs – lack of financing, poor quality in their supply chain, difficulties in adopting new technology, constrained managerial capabilities, and low productivity can become more aggravated in a globalized, technology-driven environment.
SMBs and Covid-19
When Covid-19 hit in 2020, it had a major impact on all businesses, but most of all on SMBs. Guidant Financial conducted a survey to research the impact of Covid-19 on small businesses. Those who responded to the survey reported that 23% had a loss of revenue, which then led to 11% reducing their budget, 11% temporarily closing, 10% cutting their own wages, and 7% making a temporary pivot to social-distancing practices.
This global crisis has depressed economies around the world, and many predict it will take years for a full recovery in certain regions. However, on a positive note, SMBs now have better access to global markets and knowledge networks. They have a more direct path to suppliers and customers due to the digital innovation organizations were forced into over the past year.
Small business owners are true innovation leaders and hold an advantage over larger companies by adapting to changes more quickly. Through digitization, SMBs have been increasing their online presence and switching to online models for their products and services.
SMB business owners have always been and will continue to be the backbone of the global economy. Despite the many struggles thrust upon them due to Covid-19, these entrepreneurs will continue to make great strides to survive and thrive.