The amount of money that small businesses reinvest back into their local communities is on the rise totalling $50 billion this year, up from $38 billion in 2017. This equates to 45 cents out of every dollar spent at small businesses going towards salaries, payments to local suppliers and support for charities, schools and sponsorships.
This trend, coined the “Boomerang Dollar” by American Express, clearly demonstrates the crucial role that local businesses play and comes during the month of Shop Small, a national movement to shine the spotlight on the importance of small business and encourage Australians to walk through their doors.
The Economy of Shopping Small: Back Your Backyard report reveals that on average, small businesses give $10,000 each year to local charities, plus a similar amount to schools, sporting clubs and local group and event sponsorships.
The amount of community backing provided by small businesses does not go unnoticed. Two-thirds of consumers acknowledge their contribution to local groups, initiatives, events and schools, and 81 per cent say that local businesses foster a sense of community.
Lisa Belcher, Vice President of Small Merchants for American Express said, “Australian small businesses deliver a whole host of intangible benefits to local communities such as their sense of character and rich diversity, but this figure acknowledges their significant monetary contribution. It proves that it’s essential that consumers make ‘shopping small’ part of their regular shopping routine and a reminder that every dollar spent with a small business makes an impact.”
Despite the ‘Boomerang Dollar’ increasing in the last 12 months, in a sombre sign for small businesses, the research shows consumers are shopping less frequently at their local shopping village compared to two years ago.
In response, around a third of small businesses are planning to change strategies over the next 12 months to attract more customers. Their top priorities are: improving the way they use social media (32 per cent), increasing online sales (28 per cent), using more technology (27 per cent), adding more staff (22 per cent) and entering into a new partnership with another business (17 per cent).
Pointing to a lack of digital know-how, the research reveals only 38 per cent of small business currently use social media to market to customers, and only a quarter have a website for sales and bookings.
Brian Walker, CEO, Retail Doctor Group said, “For any small business, spending time investing in your online presence should not be underestimated. Owners need to prioritise developing a strong online brand that sets them apart and talks to how and why they are different. Once a digital strategy is in place, there are tools available that can deliver powerful customer intelligence to help small-business owners remain competitive.”