While they may seem to inhabit two different worlds, small businesses and major corporations are often entwined in symbiotic financial relationships. In fact, support from large companies may be the secret to reinvigorating and expanding the U.S. small business sector. 

About 99 percent of all independent companies in the U.S. employ fewer than 500 people. Small to medium-sized businesses (SMBs) employ a majority (52 percent) of American workers, according to the U.S. Small Business Administration. Smaller companies are critical to the U.S. economy, generating jobs and revenue, and when they experience a downturn, so too does the nation.  

Small businesses have created a disproportionate share of new jobs in recent decades, and at the same time, they have been important players in pulling the nation out of recessions. However, today, many small businesses are freezing their hiring and expansion plans as consumers spend less and growth is more uncertain. This doesn't bode well for a strong economic recovery.

Some analysts are looking to the symbiotic relationship between large enterprises and SMBs for a boost to the latter's business. Large enterprises, of course, spend billions of dollars each year purchasing products and services from smaller companies.

There is evidence that the more contact a small company has with a large enterprise, the more profitable the smaller company's business becomes. In fact, according to a recent study by the Center for an Urban Future, seven out of 10 SMBs increased both their revenue and their payrolls within two years of becoming part of a larger corporate supplier base. The study, "Breaking into the Corporate Supply Chain," interviewed more than 200 small American companies.

When a smaller company interacts with large enterprises, the small business ushers in changes that improve its overall organizational structure, management practices, and operations. In order to serve larger customers, it may upgrade its technologies and increase efficiencies to meet service-level demands. Following this pattern, many small businesses see greater financial success and, as a result, can hire new employees and seize growth opportunities.

There are other benefits, as well. Small companies that have large enterprises as customers often find that credit is easier to obtain. The transfer of knowledge is greater, too, with larger companies often "spilling over" new knowledge, innovative ideas, and business models to their smaller partners, allowing the smaller companies to become fitter, more flexible, and more forward-thinking.

Read the full article online at the Industry Market Trends website