The ripple effect: How small businesses benefit when big businesses thrive

Small businesses are the lifeblood of the US economy. They might not get the headlines or the attention from Wall Street commentators but they are crucial to the nation’s financial health. There are 28.8 million small businesses across the county – 99.7 per cent of the total – and they employ 56.8 million people, which is almost half of the total US workforce.

But it’s wrong to see small and big businesses as completely separate beasts. They all operate together in the same ecosystem, feeding off one another. When big businesses thrive, the ripple effect filters through to a network of smaller companies.

Big orders create work

The first and most obvious example of this phenomenon is in the way in which big business orders are handled. When a big business wins a multi-million-dollar contract, chances are that not all of the work involved in that contract will be done in-house. Small firms have the chance to gobble up sub-contracts and work in partnership with larger outfits.

There’s a great example of the way in which big contracts are carved up in an article for Popular Mechanics, which details the 13 different type of craftsmen it took to make a $682 million naval warship. The Arleigh Burke-class destroyer John Finn, built at Ingalls Shipbuilding in Mississippi, deployed the talents of an array of ship fitters, riggers, welders, painters and carpenters.

It’s a great study in how skilled smaller operators play a big part. Big industrial structures such as warships, trains or planes needs lots of technical work. That means the need for industrial designers with an eye for detail, deploying blast rooms from the likes of Airblast AFC to prepare the surfaces of the materials used and even logistics from experts in transporting large scale structures.

Not only this, but there is also the indirect impact of an expanding big business. When large companies set up new offices, it means work for construction companies in the short term and it brings in workers who need to shop and live locally – giving extra custom to completely unrelated businesses.

Mentoring

The ability to pitch for – and win – part of the patchwork of jobs needed to deliver huge projects isn’t the only way in which big businesses can have a positive impact on the small businesses around them.

Whether it’s from a purely reputational point of view or out of genuine ethical desire – many big businesses choose to mentor and support those around them.

In some cases, this is about giving others a leg up to create a whole area of region that can specialise in one particular industry. If a town, city, county or state becomes well-known for one thing then everyone benefits from the same reputational uplift.

In others, big businesses want to show that they care about the communities they live in – the areas in which their employees have to live and work. In these instances, as All Business notes, mentoring schemes, coaching or just plain capital can be donated to assist others. It makes great PR and, again, helps to create an atmosphere of entrepreneurial success which is no bad thing for anyone.

Whether through giving them business – directly or indirectly – or through mentoring, investment and support, a successful big business could, and should, ensure that smaller firms around it feel the benefit too.

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