Business Finance
The Ripple Effect of Supporting Local Businesses
8 November 2024
In the bustling street of a small Malaysian town, local businesses thrive as the heart of the community. These establishments foster personal relationships, create jobs, and drive cultural enrichment, thus creating a ripple effect of positive change. Their impact extends far beyond transactions; they are community hubs where patrons are welcomed by name and their individual tastes are celebrated.
The Power of Local
Local businesses hold immense power. They are the lifeblood of our communities, driving economic growth and fostering social cohesion. When we support local businesses, we contribute to a cycle of prosperity that benefits everyone. This section explores the profound impact of local businesses and the interconnectedness they bring to our communities.
Beyond Just Transactions - Community Effect
Supporting local businesses is more than just a financial transaction. It's about building relationships, nurturing talent, and creating a sense of belonging. Local businesses often sponsor community events, support local schools, and provide jobs for residents. These contributions foster a sense of pride and ownership among community members, making our towns and cities better places to live.
The Importance of Supporting Local Businesses in Malaysia
There are 1,226,494 MSMEs in the country, with micro businesses forming the largest group at 78.6%. Small establishments come in second at 19.8%, followed by medium establishments at 1.6%. This section delves into the critical role these local businesses play in building stronger, more resilient communities and the broader economy.
In addition to significant revenue growth, MSMEs in Malaysia are increasingly prioritising digitalisation. Over the next 12 months, key digital priorities include enhancing the use of new technologies, improving digital capabilities, expanding into new markets, and introducing new products and services. Support in digitizing businesses is a top priority for 12.0% of respondents, alongside needs for business and networking events (17.4%) and business coaching/upskilling (12.0%).
Despite these advancements, MSMEs face notable challenges such as lack of new revenue streams and limited access to financing. However, impactful changes such as stronger sales and revenue, upgraded business tools, and improved branding and marketing results have been instrumental in overcoming these obstacles and driving sustainable growth.
The Backbone of the Economy
Local businesses also contribute significantly to GDP and employment. According to the MSME Business Outlook 2024 survey, over 72% of MSMEs saw increased revenues in 2023 compared to 2022. This growth was particularly notable in the Services, Manufacturing, Construction, and Wholesale & Trading sectors. The improved domestic demand in 2023 fuelled the country’s GDP growth of 3.7%, with projections indicating a further increase to 4.3% in 2024.
Challenges Faced by Local Businesses in Malaysia
Despite their importance, local businesses face numerous challenges that can hinder their growth and sustainability. One of the most significant obstacles is the intense competition from large corporations and chain stores that have greater resources, wider market reach, and economies of scale. These larger entities can often offer lower prices and more extensive product selections, making it difficult for local businesses to compete.
Additionally, access to financing is a critical issue for many small business owners. Traditional financial institutions may view local businesses as higher-risk investments, leading to difficulties in securing loans/financings or lines of credit necessary for expansion, inventory purchase, or operational improvements.
Regulatory hurdles and administrative burdens can also pose significant challenges, as local business owners may lack the expertise or resources to navigate complex bureaucratic requirements.
This section delves into the specific hurdles local businesses face, detailing the challenges they encounter, such as difficulty finding talent, lack of new revenue streams, and limited access to financing, and the types of support they require to overcome them. Solutions include community-backed funding initiatives and tailored financial products.
Competition from Large Corporations
Large corporations often have more resources and greater market reach, making it difficult for local businesses to compete. This competition can lead to reduced market share and financial strain for smaller enterprises.
Access to Financing
Securing financing is a common challenge for local businesses. Without adequate funding, it’s hard to invest in growth, improve operations, or weather economic downturns. Access to affordable and flexible financial products, whether conventional or Shariah-compliant, is crucial for their success.
The Need for Support
Local businesses need community and institutional support to thrive. This includes access to financial services, mentorship, and a supportive consumer base. By rallying behind our local businesses, we can help them overcome these challenges and succeed.
Alliance Bank: Your Partner for Local Businesses
Alliance Bank is committed to empowering local businesses. We offer a range of business banking products and services designed to meet the unique needs of small enterprises. This section highlights how Alliance Bank supports local businesses and invests in their future.
Empowering Local Businesses
Alliance Bank provides tailored financial solutions that help local businesses grow and thrive. From business loans/financing to cash management services, we offer the tools and resources needed for success. More than just typical banking products and services, Alliance Bank provides several key differentiations that further benefit local businesses, such as:
- SupportLokal initiative that promotes local businesses to reach potential new customers online
- BizSmart® Solution, a collection of SMEs database that local businesses can connect and network with each other
- Business opportunities and access to digital trainings and webinars
Business Banking Products and Services
Our comprehensive suite of business banking products includes flexible financing options, competitive interest/profit rates, and personalised financial advice. We work and maintain close relationships with local business owners, understanding their specific needs and the local business challenges, and providing the best possible support in terms of financial assistance.
Investing in Your Future
At Alliance Bank, we believe in the potential of local businesses. We invest in their success by constantly improving the innovation of financial products, providing expert guidance, and delivering ongoing support. Our goal is to help local businesses reach their full potential and contribute to the prosperity of our communities.
Supporting Local Businesses: A Call to Action
Building a Network of Success
Initiatives like the SupportLokal and BizSmart® Solution support local businesses, creating ripple effects of success. As these businesses grow, they create jobs, support other local enterprises, and contribute to community development. Together, we can build a network of thriving local businesses that uplift our communities.
Celebrating Local Success Stories
Every local business has a story worth celebrating. From humble beginnings to remarkable achievements, these stories inspire and motivate us. By highlighting and celebrating local success stories, we foster a sense of pride and encourage others to support local businesses.
Check out our customer’s testimonials on the features of our business banking that have improved and enhanced their local businesses beyond typical banking products and services, no matter the types of businesses and all walks of life.
Building a Brighter Future: Together with Local Businesses
Local businesses are the heart of our communities. They create jobs, contribute to our unique character, and build strong connections, but they also face challenges such as competition from larger corporations and limited access to financing.
Community support and initiatives like Alliance Bank's SupportLokal and BizSmart® Solution play a critical role in helping these businesses overcome these obstacles and thrive.
By supporting local businesses, we invest in a brighter future for ourselves and our neighbours. Gain more exposure for your own business and support our local business community with SupportLokal now.
Source:
- SME Annual Report and MSME Insights – SMEinfo Portal
https://www.smeinfo.com.my/sme-resources/publication/sme-annual-report - MSME Business Outlook 2024 Malaysia
https://www.alliancebank.com.my/msme-business-outlook-2024-report