Posted 10 hours ago
Proposed by MasterCard
Two things that united us during the pandemic were the recognition that small businesses are the lifeblood of our communities and our collective determination to keep them afloat. But small business owners need support from both sides of the coin.
In our rapidly changing world, they need better access to capital, tools and expertise to digitize their operations and run their businesses more effectively. Small and medium-sized enterprises (SMEs) in the business-to-business space, a segment often overlooked despite payment volumes totaling nearly three times that of consumer spending, have fallen behind in digitization and require more support to remain competitive in an increasingly globalized economy.
Governments can and must play a role. As part of my work with Mastercard to help identify specific ways to help small business owners not only survive, but thrive, I participated in focus groups with entrepreneurs from all industries – and around the world – to learn more about their challenges, and a really hit home.
Sandra, a B2B entrepreneur in Canada’s cosmetics industry, is struggling to secure financing and manage working capital to keep her business going through the pandemic. As a female business owner in a non-tech industry, she felt her voice was not heard by decision makers. “I’m a mom, I run a business, I run a household – we are the queens of the systems,” she said. “Women need access to programs and education that can help them run their businesses and actually use their expertise.”
Small businesses play a disproportionate role in the global economy. In fact, they represent 90% of all businesses and employ around 70% of all workers in the world. Given their importance, entrepreneurs like Sandra should receive greater support from governments and large private sector companies to help them make and receive payments, gain equitable access to finance that can support their business. long-term growth and join the broader ecosystem of digital businesses.
The good news is that many governments are mobilizing. the Business Development Bank of Canada has supported small business cash flow by providing them not only with working capital loans to bridge cash gaps and support operations, but also by providing purchase order financing with flexible terms to help them meet national and international orders. In Chile, policymakers have implemented the “Digitize Your SME” program, which helps small business suppliers connect with buyers, by providing a tool co-created with the Inter-American Development Bank that helps business owners assess their level of digital maturity. It also offers webinars on the best use of technology, among other initiatives.
These are just a few examples of the roles governments can play and the policy tools they can use to support these businesses. In the new white paper, “Reinventing Support for Small Businesses: The Path to Building Stronger, More Resilient Small Businesses Through and Beyond COVID-19” Mastercard’s Policy Center for the Digital Economy and Kearney’s Global Business Policy Council have identified several roles governments can play to build resilience, with a focus on small business-to-business (B2B) businesses.
Driving and catalyst for working capital and financing
This role has been particularly important in the midst of COVID-19 to keep small businesses in business. By easing cash burdens and removing barriers that hinder the ability to receive capital – especially for women business owners and entrepreneurs of color who have been disproportionately hit hard – governments can help small businesses to operate on a daily basis. Many B2B companies need support for basic digitization efforts, or risk being excluded from global opportunities.
As small businesses become increasingly digital – and cybercriminals increasingly see them as targets – governments can ensure a safe and secure operating environment with regard to cybersecurity, trust and transparency. Free or subsidized cybersecurity tools, for example, would make them much less vulnerable, let alone backing up the data of their own customers and consumers.
There are financial and digital tools, but many small business owners – already overburdened with the task of keeping their doors open – may not know them. Governments can also create opportunities to connect entrepreneurs with each other for knowledge sharing and business growth.
Convener and connector
Everyone has a stake in the vitality of small businesses. Governments can bring together – and engage – other actors, including private companies, non-bank financial institutions, development finance institutions and non-governmental organizations, by harnessing their collective expertise to support cash flow management , capital and digital services to B2B companies.
These are just a few of the ways that policymakers can take action – and these are just the starting point. Governments can link and engage with business associations to understand the weaknesses of small and medium-sized B2B businesses at a deeper level – and to create a broader support ecosystem alongside business associations, multilateral organizations and other governments.
I hope we can spark a dialogue between the public and private sectors on policy mechanisms and action-oriented best practices that can best increase the resilience of small businesses. As the world emerges from the COVID crisis, governments and the private sector have a great opportunity to empower SMEs not only to survive, but also to thrive and position themselves to better adapt to a constantly changing world. evolution.
Discover the whole report and more from Mastercard.
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