Small- and medium-sized businesses (SMBs) are incredibly important. They account for 99.9 percent of all businesses in the United States, which makes them crucial for the nation’s economy — not to mention the prosperity of their owners and employees.
As wages and the way we approach work go through unprecedented evolution, the challenges faced by SMBs continue to mount. The key to meeting these challenges lies in two connected factors: financial literacy and an empowered, diverse workforce.
“These days, working somewhere isn’t just about being paid well, it’s about being recognized,” said Doug Mayorga, president of the U.S Minority Chamber of Commerce (U.S. MCC). “It’s about growth and creating an empowering organization that will sustainably develop talent to reach higher standards — and maybe, one day, they, too, can go out on their own and start a business.”
Diversity
Mayorga has been president of the U.S. MCC — which promotes the economic development of its members, clients, and associates — since 2000. When asked why it’s crucial for small businesses to focus on hiring diversity, his response was immediate.
“Diversity means innovation,” he said. “Diversity is the single most unifying ingredient in developing the future workforce. If you are operating without considering diversity, equity, and inclusion when planning the future of your business, you will face a roadblock in the collaborative, global economic community of the future. Diversity in your company’s culture is essential — the human element is what keeps your brand and business relevant across borders and boundaries.”
Mayorga sees the concept of “income empowerment” as part of this push for diversity. “Income empowerment means a fair and equitable wage and creating sustainable potentiality that will yield results,” he argued. “If you hire talented people but pay them less because of their gender, race, or age, you’re creating a disadvantage in economic ecosystems. Less than fair and equitable wage hurts the human element powering your business, but it will be localized to your own organization.”
Financial tools
Success is never guaranteed for small businesses — in fact, the opposite is nearly true. The failure rate for SMBs is 20 percent in the first year, spikes to 70 percent after 10 years. Mayorga says one key reason SMBs struggle is a lack of financial literacy. In fact, a study by Intuit, Inc. found that only 40 percent of small business owners in the United States considered themselves to be financially illiterate, yet 81 percent handled all the financial decisions of their business alone.
Mayorga says changing those numbers is the key to not just avoiding failed businesses, but for growing them.
“It’s critical for SMBs to be able to take control of their finances because that leads to collaboration, trust, and growth,” he said. “Balancing a checkbook is one of the top skills a young person needs to thrive in the world — these are skills we teach children. If we expect fiscal acumen and responsibility from today’s youth, why would a small business not do the same? When you can manage your business and thrive with the money you are making, partners can trust you to collaborate, to contribute, and to ignite growth.”
Gaining the necessary knowledge and tools doesn’t have to cost money, according to Mayorga.
“Technology gives every business owner cost-free tools for fiscal control,” he notes. “Digital banking services are cost-efficient. No-fee banking for small businesses are phenomenal platforms for growth. If you’re a startup, fiscal tools are plentiful and free of cost — with a simple Google search — and training from free education providers like Coursera and edX means you can attend business school cost-free online and learn how to manage your business.”
Mayorga’s advice for workers is to look for SMBs that offer income empowerment, and the opportunity to develop your skills.
“If you’re going to work somewhere, make sure it’s somewhere you can grow and feel good about it, too,” he said.
