Can companies have board-level champions -to stand up for them and help create a better landscape for business?
It has been estimated that it is today 3 x times longer for an entrepreneur to do a deal with a major player in the UK than in Asia or in the US. Many feel that there are almost too many barriers today to young businesses. Another estimate claims that it costs an extra 50% to become established compared to 20 years ago.
This is all slightly non-sensical as the UK economy needs small business and entrepreneurs to be able to be successful. The small business arena makes a hugely significant contribution to the UK economy, forming 98% of private sector businesses. This is due in no small part to the entrepreneurialism of the UK’s business leaders and start-up founders who provide a fantastic range of innovative ideas and SMEs that drive the private sector forward.
One can argue that the foundations of the long boom period of the 90s and 00s was in no small part due to both the UK’s ability to be innovative, creative and to allow entrepreneurs to thrive.
So it is only logical to cut the red tape and allow entrepreneurs to prosper.
But it is deeper than that.
Purchasing departments need to possess a greater understanding and plan to create a plan that does encourage young business. In the last week alone, I have had three conversations with really good products and entrepreneurs who have spoken to their despair with some of the conversations that they have with procurement. They note that they gat asked for listing prices that compete with larger players and there appears to be no real plan to work with smaller companies.
As noted above, it has been estimated that it today takes 3x longer to do a deal with a major player in the UK. Often it is noted that a sales process can take close to a full year.
The problem for young businesses is that such long processes do create such pressure on their business as often it 1. Costs more and 2. Often they employ young people who get discouraged by the behaviours they encounter in dealing with larger companies
The Banks have increased, quite radically, their overdraft charges – from 13% to around 39% – which is hardly going to encourage those that live to close the boundaries of their cash flows.
Another report noted that often procurement less interested to work with young businesses – due to the fact that often the prevalent psychology is to be risk-averse – and this creates an extra barrier to doing business.
One can understand why many lose faith and feel that it is not always a level playing field. The irony, of course, is that most boards in large companies do want to see new innovation, do want to work with entrepreneurs – and often enjoy liaising with entrepreneurs themselves – and understand just how important the balance is between corporate player and entrepreneur. Both need each other.
Most boards want to see change so where does the problem come.
It is a deeper issue. Business today has become more risk-averse and middle management have become often the champions of the “safe decision”. It is one of the greatest complaints amongst boards. Why are their own people less brave and bold?
There are many reasons but it does need board-level champions to stand up for the small business and make sure stronger actions do happen. It does not take much to create meaningful change. Just watch the smiles appear on the faces of entrepreneurs is a positive dialogue could be developed – and this would help us all, help the overall economy.