Should big businesses support small businesses?

It’s an interesting question. Why should a bigger, potentially more successful company, support a small business?

Do they have anything to gain by providing any help and what form should that help take?

Without getting too detailed, let’s look at some of the numbers surrounding the small business community in the UK.

*ONS 2017 UK Business Population https://www.gov.uk/government/statistics/business-population-estimates-2017 

For the benefit of the graph, a micro-business has no employees, a small business has fewer than 10 employees and everything else has 10 or more.

There are 5.7m businesses in the UK – 5.4m of them are micro (4.3m) or small businesses (1.1m)

And the point is?

Small business owners, especially those with micro-businesses, have less time to learn all the skills necessary to really grow. Accountancy, bookkeeping and marketing are obviously not the real reason someone would decide to start a physiotherapy business. When they need advice it can prove costly, something a cash-conscious self-employed person may not have at their disposal.

If the small business owner is missing some of the above skills they can suffer as a result. The Federation of Small Businesses in the UK commissioned a report that found 25% of all small businesses in the UK lack confidence in their digital skills. Just think about that for a second… around 1.3m businesses feel this way. They still use paper diary planners for their appointments and are among the three million businesses that don’t take card payments.

When a small business goes bust, who’s the customer then?

328,000 UK businesses went bust in 2016 and for a variety of reasons. Education is a huge factor in that. If a business owner is helped to run and grow their business, then issues are dealt with as they happen.

Running your own business, especially as a sole trader, can be very lonely existence. Being able to deal with day-to-day issues while still doing the thing you got into business to do, can be mentally draining. This impacts more than just the business owner; it’s is often the cause of relationship breakdowns, which then compound the problem, as this article by Entrepreneur Magazine highlights.

So what’s missing?

A central repository for basic learning would be a start.

Having this in partnership with local service providers would provide a business with a cost-effective resource to help them keep their company running and to help it become successful.

It’s not a new concept. The Small Business Administration (SBA) in the US has been doing it for years. Its learning centre has 63 pages of courses to help the lone business owner, and it has formed partnerships at a local level with banks, city councils and professional organisations, all providing somewhere to go for cost-effective advice.

The main thing to recognise is that this is all being coordinated by central government, which does it for a very good reason.

It recognises that the small business is critical to their economic recovery and competitiveness in the global market. Formed in 1953, the SBA has one mission to help Americans start, build and grow businesses.

me:now met with Linda McMahon, head of the SBA

What have we got in the UK?

In the UK, we have the Small Business Commissioner who is tasked with “tackling late payment and unfavourable payment practices in the private sector”.

This “department” is aimed at tackling the problem of larger businesses that pay late.

Is this really the biggest problem facing small businesses?

What about addressing outdated business rates, supporting existing businesses (not just startups) and providing education in skills that will keep them trading? Shouldn’t those things be a higher priority? We need a version of the SBA here in the UK, an organisation that actually has the small business at the heart of what it does, not just something aimed at putting out the fires when a major government contractor goes bust.

Conclusion

More small businesses will survive and thrive if we form similar local partnerships in the UK – partnerships that incorporate a central learning strategy. If businesses survive and grow, they’ll need more product to use/sell. If they fill their appointments, they make more money, hire more staff, need more advice and services, which they’re then better placed to pay for.

It benefits everyone, the small businesses themselves, and the other businesses who have them as clients.

When a small business dies, they stop being customers in their own right.