2016-02-02

Small Business Drive Economies

I came across this small - ahem - article on small business in Reuters. It tells of how cheese firms are raising capital through the issuing of debt.


"An Italian dairy cooperative has sold bonds backed by Parmesan cheese (why can't they call it by its real name? Parmiggiano. Parmesan is the generic term and has come to characterize knock-offs), the company said on Tuesday, a rare example of one of the country's plethora of small firms raising funding on capital markets..."

"...More than 95 percent of Italian companies have fewer than 10 employees and traditionally rely on bank lending for financing.

But banks' willingness to provide credit has eroded as bad loans piled up on their balance sheets during the recession, making it harder for smaller, more vulnerable companies to get funding."

Which got me thinking about North America. Among the G7, Italy probably relies more on SME's given it really never really got into the whole mass production/market capitalization/public companies thing than its partners. They've so far resisted the temptation (they're not exactly a trusting bunch and handing over operations and control to stockholders doesn't sit too well with the creative and artistically minded Italians) but how long can they really hold out before realities kick in?

In the meantime, what makes Italy unique is many small companies offer international brand recognition.

Still, small business doesn't just play a major role in Italy. It does so in North America as well.

According to Industry Canada via Wiki:

"...Small businesses make up 98.2 percent of employer businesses, medium-sized businesses make up 1.6 percent of employer businesses and large businesses make up 0.1 percent of employer businesses. In 2012, over 7.7 million employees, or 69.7 percent of the total private labour force, worked for small businesses and 2.2 million employees, or 20.2 percent of the labour force, worked for medium-sized businesses. In total, SMEs employed about 10 million individuals, or 89.9 percent of employees. "

And the USA as per the SBE Council:


"...In 2012, according to U.S. Census Bureau data, there were 5.73 million employer firms in the U.S. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses, and businesses with less than 20 workers made up 89.6 percent. Add in the number of nonemployer businesses – there were 23.0 million in 2013 – then the share of U.S. businesses with less than 20 workers increases to 97.9 percent..."

***


In addition, it's worth noting here's a difference between a corporation and small businesses. More often than not, though we appear to share the same concerns and must adhere to basic business principles (too often misunderstood by the general public), it's generally not the case as large companies operate on a different level and often exert more pressure on government than SME's do; though organizations like the CFIB (Canadian Federation of Independent Business) are changing this landscape giving an organized voice to small-businesses in Canada.


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