Small businesses are essential to fuel the economy and create good jobs. America’s 32.5 million small businesses account for more than 99% of all U.S. companies and employ just under 47% of private sector employees.
But small businesses have been hit hard during the pandemic—and now cite inflation, worker shortages, and supply chain issues as major challenges. Large companies have a role to play to ensure small businesses persevere and can lead the charge to help them grow and thrive.
Here are five things large companies can do right now to help small businesses realize their full potential:
1. Speed up payment processing.
Paying small businesses’ invoices faster can help them become more profitable, hire more workers, and grow more quickly. A 2016 study showed that paying firms just 15 days sooner had a huge impact on firm growth.
In 2011, the QuickPay reform accelerated the payment period from 30 days to 15 days for a subset of small business contractors in the U.S. The study found that, on average, each accelerated dollar of payment led to an almost 10 cent increase in payroll. Collectively, the new policy – which accelerated $64 billion in payments – increased annual payroll by $6 billion and created just over 75,000 jobs in the three years following the reform.
2. Include small business suppliers in your operations.
Suppliers are essential to almost every business. Large customers of a small company will likely get more attention and better service and reliability than if they were to be a small customer of a large supplier. Large companies can also consider splitting orders between two smaller firms to ensure a backup.
It’s a strategy that has worked for large companies including Boeing and Coca-Cola. Boeing suppliers, like woman-owned Wildwood Electronics based in Madison, Alabama, are responsible for making NASA rocket launches possible—and the partnership has helped Wildwood Electronics boast $7 million annual revenue with just 32 employees.
Coca-Cola uses a diverse network of nearly 70 independent bottlers that operate as a coordinated, but diverse supplier system.
3. Partner with a small business on federal, state, and local contracts.
The Federal Government is the largest consumer of goods and services in the world, spending roughly $600 billion each year. The recently passed Bipartisan Infrastructure Law gives states and local authorities hundreds of billions of dollars to rebuild our communities in the coming years.
Brian Butler, CEO of Vistra Communications and President of the Tampa Bay Chamber, says large firms should consider helping small firms gain entry into infrastructure investment opportunities.
Over $110 billion has been announced and is headed to states and local governments with over 4,300 specific projects identified for funding.
4. Help small businesses adapt technology.
A recent report from the U.S. Chamber’s Technology Engagement Center shows how America’s largest tech companies can level the playing field for small businesses. Social media accounts, accounting software, point-of-sales tools, and productivity tools have all made it easier for small businesses to expand their customer bases and increase efficiency.
Right now, the tech industry can lead the way in boosting the adoption of technology platforms as small businesses plan to continue to increase investments in their use of tech across their business in the next two to three years.
5. Participate in mentorship programs.
It takes years to gain the business experience to run a successful company. New small business owners often have the grit and ingenuity to start a great company but may lack the experience needed to ensure it grows. Leaders at large companies can act as mentors to guide small firms via formal or informal partnerships and programs.
For example, in NASA’s Mentor-Protégé Program small businesses gain opportunities to participate in NASA prime contracts and subcontracts. They gain expertise from larger corporations, while America’s space program benefits from innovation and cutting-edge creativity unique to small firms.
Learn more about how the U.S. Chamber’s small business advocacy work at uschamber.com/sb.
Story by Lindsay Cates, US Chamber of Commerce
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