SMEs may be small but are powerful says Boost Capital’s MD Alex Litner

SHOP small. Shop local. That’s the message to consumers on December 3, the UK’s fourth ever Small Business Saturday, a celebration of the work that SMEs do in their communities. But while small company bosses should bask in the light cast on them on this day in the calendar, there are year-round lessons they can take away from the occasion. Namely, never stop marketing, constantly seek new customers, and always promote your local credentials as a business strength.

Small but influential

The promotional event was launched by American Express in the US in 2010, highlighting the importance of the local high street, and the varied nature of its smaller bricks and mortar businesses. Whether it’s independent kitchen and bathroom shops, beauty salons, restaurants, cafes, or neighbourhood solicitors’ offices, many of the enterprises in a local community are small by definition, only employing a handful of people. But in terms of their influence, they punch well above their weight, with SMEs able to engage with their customers in a way their larger rivals simply cannot. The hope is that shoppers are reminded on December 3 how great their own small business community is, and then use and support it for the rest of the year.

At the heart of communities Small Business Saturday isn’t just about acknowledging the goods and services SMEs provide to the residents around them. Research shows that about two-thirds of shoppers support SMEs on the day in recognition of the contribution high street firms make to their local communities. This is more than selling workaday widgets, and fulfilling everyday essential functions for people. Small companies create jobs, buoy the local economy, and support society in general. Local business owners are also often key figures in the community, serving as school board governors, or even local councillors. Many run social enterprises, such as meals-on-wheels provision for the elderly, or training for the unemployed.

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SMEs don’t just serve the community, they are the community. They are intimately involved with their customer base, living and working alongside these people day in and day out. That is something they and others can promote as a strength through events like Small Business Saturday, but that they should advertise throughout the year as well.

Saturday sales boost

On a simple and immediate level, there’s a potential financial advantage for small firms taking part in the event – last year, Britons spent around £623 million with SMEs on Small Business Saturday, up almost a quarter on 2014. Eight out of ten shoppers say they would pay more for an item from an independently-owned, small retailer rather than a big household-name shop or online vendor. Most persuasively of all, the Keep Trade Local campaign by the Federation of Small Businesses calculates that for every pound spent in a local business, 83 pence goes back into the local economy. In other words, shopping locally doesn’t just help the shop keeper or business owner, it enriches the community as a whole. 

Universal truths

I should declare that I worked for American Express myself for eight years, handling the company’s small business card offerings in many parts of the world. In that role, I had to inhabit the minds of small business owners to anticipate their spending needs. What is revealing is that SMEs share more similarities than differences. Cashflow remains a major issue for enterprises of all types, whether in retail, hospitality, or business services – typical high street businesses. Financial pressures often emerge quickly and unexpectedly, from the need to buy extra stock, investing in new equipment, or the desire to renovate premises to keep up with competition.

In all of these situations, bosses want fast solutions. Entrepreneurs constantly juggle responsibilities, becoming experts in everything from marketing, finance and operations. This means that time is of the essence when dealing with them. Serving SMEs’ needs American Express works hard to understand its customers, and it rightly wants to trumpet their successes through campaigns like Small Business Saturday. We at Boost Capital strive to take a similar approach, listening to our customers, monitoring their changing needs, and adapting our own form of short-term finance to best serve those shifting requirements.

December 3 is a great chance to raise the profile of local businesses, and celebrate the sterling work they do in their communities. But it’s also an opportunity to discuss some of the challenges that SMEs face, and to educate business owners about how to tackle these common problems effectively. That’s why there will also be workshops and networking events for SME bosses across the country in the build-up to the first Saturday in December, and on the day itself. I want to emphasise again that small firms are local champions, providing their areas with something much more meaningful than the mere contents of a shopping basket or useful professional skills – important though those things are. Business owners would do well to recognise this themselves – the fact they’re at the heart of the communities they serve – and make that a selling point all year, not just on December 3. Small is beautiful, valuable, and unique. Just make sure your customers know it, too.