The (economic) storm that is upon us
Let's get one thing very clear - unless you are a banker or an undertaker, the current economic climate is tough (very tough). For some of it, we are affected by the international economic headwind coming our way due to global supply-chain, weak and feckless leadership, avoidable conflicts, and the like. But, our politicians do not get away that easily - most of the woes that are upon us are purely self-inflicted wounds. The housing crisis, energy crisis, debt crisis, none of these were caused (or facilitated) by anyone else than our own political "leadership". And I am not picking on one party over the next - where it truly comes to where it matters, they are all the same. And both major parties have done a lot of damage to the small business environment in Australia.
The importance of small business
Ever played roulette? If you had a million dollars at your disposal - how would you place your bets. Would you go all-in all at once? Would you hedge your bets? What if you could not get your million dollars in smaller denominations than $100,000 per note? What if you could not divide it at all - you have to place the million, the entire million, in one square. What do you choose?
At best, you can get the odds to 50/50. You win, you can play again; you lose, it is game over. Not too long ago, the auto-manufacturing left Australia. Toyota, Mitsubishi, Ford, and finally the iconically Aussie Holden (well, actually, General Motors) all closed shop in Australia. With them wiping out thousands of direct jobs, and tens of thousands additional jobs in the adjacent supply and service industry. That makes the news.
Present day, almost daily a construction company goes under. Most are small. As well as independent retailers, small factories, and the hospitality sector is struggling. You hardly hear of that in the news - because each of them is "small, and not significant" (just like the "non-essential" business nonsense we had to endure during the COVID-madness.
But small business matters, as it is the ability to hedge - during economic headwinds - some will indeed falter, but others will survive or become stronger. Why? Because some have better business operations, better business models. Over all, the market will become stronger.
The "small business experiments"
In effect, each small business is an experiment on how to do things. Some small businesses copy a successful formula, others invent a new one. Not all the new formula's work, and these will see the negative results (they adjust or try again). This experiment is best done in a "controlled environment".
What is a "controlled environment" in the market place? Is the market place not constantly in flux due to outside influences?
The answer is yes, the market place is a chaotic area, where everything can influence everything else. But... that is true for every participant in the market place. Until the strong but clumsy arm of the government gets involved, because they have a need to be seen to do something (anything really, because the news-cycle is short, the consequences are for a later concern). The problem with government intervention is exactly that, the urge to be seen to do something at breakneck speed, means that the consequences are unpredictable. Take subsidies in order to push goods deemed to be of "merit" - it only increases the price, and then competition with increased mediocrity entering the market (pink-bats scandal? school-halls program?). Whatever industry is being "subsidised", ends up being culled after the clients have been stripped of their funds for little value. Government intervention introduces a bias for failure into the business experiments.
National security
A healthy small business community in diverse sectors is a matter of national security. The resilience that is built into the many approaches experiment simply cannot be replaced by a few large corporations. There will always be a place for corporations, especially where small business cannot operate due to the high cost of operation (a "small business" international airline is just as unfeasible as a "small business" nuclear power plant). But with a healthy small business sector, Australia will build an innovative workforce and a resilient industry. Some small businesses may even break out and become the next so-called "unicorn" - inspiring many others to give it a try. It is the small business sector that employs the most, and the most productive people. Our real GDP depends on it!
Aurelian Group is a small business helping other small businesses in Australia with state-of-the-art business software solutions. We first provide you with what you thought you could not afford, and then what you could not imagine. Contact us today.