Small businesses are more successful when they focus less on profit and more on their passion for business.
The latest data from the American Express Economy of Shopping Small Report, launched as part of Shop Small month in November, also suggests that small businesses with a focus on innovation will be healthier.
The survey of 700 Australian small business owners revealed 57 percent said their business was innovative, and 91 percent of these ranked their success as high. In contrast, 79 percent of businesses who said they were not innovative claimed a high success rate.
American Express Global Merchant Services senior vice president Melanie Cochrane said the results showed small businesses needed to keep thinking differently about their business in order to stay ahead of the competition and retain their customers.
“It might seem strange to advise a small business not to focus on the financials, but the reality is they have to challenge the conventional way of running a business if they want to succeed,” she said.
“The very things small businesses stand for allow them to be nimble and intimate with their customers -- it’s about bringing that culture internally within the organisation too.
"In doing that, the financials will take care of themselves and many more small businesses will become Small Heroes of their world.”
Customers will choose to shop at smaller operations if they have unique products and services, the report reveals. Of those consumers interviewed, 54 percent said unique offerings was an important consideration and 60 percent said they they’d switch to a small business for something they’d usually buy at a bigger chain.
The survey identified six characteristics of innovative and successful small businesses.
1. Passion: Business owners have a deep attachment to their operation, their staff, suppliers and, most importantly, their customers.
2. They define their own success: Small business owners create their own jobs and build the kind of business they are proud of, often eschewing “normal” definitions of success.
3. People come first: Emotional value is high among small business owners who often develop affectionate relationships with customers and suppliers and prioritise one-on-one interactions.
4. They think local: Community is paramount and relationships with locals are nurtured and maintained.
5. They act like a community: Intimate workplaces are established with shared values and culture.
6. A unique structure: Information flow freely in innovative businesses and all employees are trusted and empowered to make decisions and brainstorm new ideas.
Cochrane said consumers must step up and reward small business for their innovation by supporting them -- by spending up.
“It’s crucial consumers and organisations come together to foster a business environment that empowers small businesses to thrive,” she said.
“As consumers, we must demonstrate to business owners we appreciate the personal investments and sacrifices they make and increase the frequency in which we shop with them, to ensure their invested passion and resource to succeed and innovate remains.”
The national Shop Small initiative aims to support small business through exposure. Its other results revealed nearly half of small businesses were struggling financially and intended to sell.
Jenny McCracken and her artwork, Faces of Shop Small.
As part of Shop Small month street artist and small business owner Jenny McCracken created an artwork, Faces of Shop Small, immortalising 40 small business owners of various industries from across the country. It took 300 hours to complete.
“This piece is a really wonderful opportunity to celebrate small business owners in Australia,” McCracken said. “I'm proud to be creating this tribute to the hardworking men and women behind each small business who work so hard to bring their passion to life."