One-third of small businesses at the risk of closing shop

One-third of Australian small business operators fear they risk becoming insolvent in the next three to five years, a national survey has revealed. This 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. The annual Economy of Shopping Small Report has 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 vs. 70 per cent in 2018. This has led to three in five small businesses reporting flat or declining revenue growth year-on-year.

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.

November marks the month of Shop Small, a national movement founded by American Express to shine the spotlight on the importance of small businesses and encourage Australians to support them.

Released by American Express, the Economy of Shopping Small: Back Your Backyard report examines who is walking the talk when it comes to supporting Australia’s 2.1 million small businesses.

Lisa Belcher, Vice President of Small Merchants for American Express said, “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. Each and every one of us can make a difference by ensuring ‘shopping small’ is part of our regular shopping routine.”

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.

Australian Small Business and Family Enterprise Ombudsman, Kate Carnell said, “Australia is a nation of small businesses and family enterprises, and there is no doubt they lie at the heart of Australia’s economic engine room. 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.”

When it comes to government support, many small businesses are missing out on the resources available to them. Just eight per cent 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.

American Express has encouraged all Australians to support the movement and “shop small” this November by placing a focus on where and how they shop.

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