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Disrupting the digital divide

Going digital can fuel small business growth, but many businesses are struggling to adapt to rapid transformation. The Strive Community global initiative aims to bridge the gap.

Disrupting the digital divide

Small businesses are the engine of the world’s economy. They represent roughly 90% of all businesses globally and make up more than half of all jobs. But while small businesses are mighty, they’re also mighty vulnerable. In fact, the COVID-19 pandemic has had a disproportionate impact on small businesses. Nearly 60% of small and microbusinesses reported being strongly affected by the pandemic, compared to just 43% of larger firms.

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Addressing this question of resilience is a primary goal of Strive Community, which was created through a partnership between Mastercard’s Center for Inclusive Growth and Caribou Digital, a research and advisory firm focused on building inclusive digital economies. The initiative focuses on helping these businesses access the tools and resources they need to keep pace with an increasingly digital world.

“We really need small businesses right now,” says Jessica Osborn, program director at Caribou Digital, a global small business initiative launched in 2021. “They offer the best chance that we have of a post-pandemic recovery that is inclusive and sustainable, that really works for everybody.”

While consumers and bigger businesses have largely embraced this digital transition, many small businesses have been left behind. “The pandemic has laid bare the longstanding barriers to inclusive digitalization efforts,” says Shamina Singh, founder and president of Mastercard’s Center for Inclusive Growth. “Now more than ever, working with this segment of the small business community to access training for technology, access to tools, and access to capital is going to make an immediate difference.”

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THE STRUGGLE TO ADAPT

To stay competitive—and, in many cases, solvent—small businesses have had to retool their operations to cater to customers embracing the convenience and relative safety of digital buying. That’s meant retailers shifting to online buying options for customers, restaurants pivoting to online ordering and curbside pickup, and delivery drivers taking digital payments instead of cash. For many small businesses, making that transition means an added expense and a huge investment in time. “Small businesses are starting from a much lower base than larger businesses in terms of their levels of digitization,” Osborn says. “We’re seeing a lot of them really struggle to adapt and pivot to this new normal.”

Small business owners face a range of barriers in this area, from access to hardware and software to the skills they need to effectively integrate these technologies. They also may lack skills that are compatible with today’s digital environment. For instance, Osborn recently spoke with a peach farmer in rural China who was struggling to keep up with the social media requirements that are now part of his job. Rather than focusing on simply growing the best fruit, the farmer spends an increasing amount of time taking photos of peaches to post on social media and interacting with customers through live streams and online chats. “It’s a much more complex environment that small businesses find themselves in,” Osborn says. “So, we need to help them across the whole spectrum.”

To help address these challenges, Strive Community focuses on three distinct areas:

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  • Enabling small businesses to digitize their operations, including taking advantage of back-office technology to help track inventory and manage time-consuming tasks such as bookkeeping and client management.
  • Increasing access to formal financial services, from accepting digital payments to opening business bank accounts. By building a more formal financial presence, small businesses can better access business-building tools such as loans.
  • Unlocking access to bigger markets, such as building the infrastructure to start selling on e-commerce platforms that reach many more customers around the world.

“These are the things we need to do to help small businesses succeed where they are,” Singh says.

BUILDING A SUPPORT ECOSYSTEM

While many small businesses are dealing with similar challenges around digitization, it’s important to recognize that not all businesses are the same. Indeed, a small business in India likely has different needs than a small business in Indiana when it comes to adapting to an increasingly digital world. To address those unique needs, Strive Community relies on a network of partners including advocacy organizations, fintech companies, digital platforms, and traditional financial services firms. 

One example is Strive’s partnership with Grab, a Singapore-based super app that connects consumers to a range of on-demand services from millions of drivers, merchants, and agents across Southeast Asia. Elements of this partnership include the GrabFood Small Business Programme, which launched in Malaysia last year. Its goal is to teach entrepreneurs how to more effectively leverage data to boost their marketing efforts and grow their businesses. The program’s early results have been encouraging: Some businesses have seen sales spike by 30% or more after participating in the program. “Digital skilling is the answer to help these businesses find success on our platform,” says Cheryl Goh, Grab’s group head of marketing and sustainability.

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It’s this type of partnership-based approach that Singh says will deliver the hands-on assistance small businesses need to participate more fully in the increasingly digital global economy: “We’re building a small business support ecosystem, bringing together expertise and resources across the private sector, the public sector, and the nonprofit sector to really drive change.”

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