Driving a wedge between small and big business is not helpful

Businesses of all sizes can help to drive the economy forward by working together, argue Mike Cherry and John Cridland (The Guardian Thursday 2nd July)

03/07/2015, news




Big business benefits at the expense of small business: that’s a dangerous myth. Driving a wedge between small and big businesses is not helpful to securing the growth we need in our economy over the next five years of this government.

Our economy’s continued revival depends on an approach that gets the best out of companies of every size and recognises they are more united than divided in how to achieve that.

That’s why our organisations, the CBI, representing a cross-section of businesses of all types, and the FSB, representing the interests of the self-employed and small businesses, are coming together at a Great Business Debate to bust some myths.

Does big really equal bad in business? How much of a problem is the late payment of suppliers? What do perceptions of business relationships do to wider, public trust in business?

The business community is an ecosystem and entirely interdependent. We need to focus less on big versus small business, and more on how to manage the journey from small to big. We must remember that every business was small once and many small companies have big ambitions to grow.

And companies don’t simply divide into big or small anyway. What about our forgotten army of medium-sized businesses, the Ms in SME? They generate almost a quarter of private sector GDP and employ one in every six people. They’re a hotbed of growth, making that transition from small to big, yet were largely ignored in the political manifestos.

There’s already a strong story to tell about how companies of all sizes are working together. Ultimately it’s in the interests of big companies to invest in the skills, innovation and export potential of the smaller ones they depend on. Collaboration is essential to the effectiveness of our supply chains and needs to be encouraged.

Government has a role to play too. It is only through working with business of all sizes that it will be able to deliver jobs and growth, investment in people and technology to improve productivity and competitiveness, higher living standards and more exports. It can also use its own procurement decisions to encourage the growth of dynamic small, medium and large businesses.

To be a serial late payer is short sighted.

The new government is hitting the legislative ground running, looking to use its Enterprise Bill to reduce regulation and create a business environment that encourages entrepreneurship. These are objectives welcomed by firms from sole traders to multinationals.

The government is also looking to offer solutions to a symbolic business-reputation issue where much more needs to be done – the damaging late payment of suppliers. It’s expected to launch a consultation this month into plans in the bill to create a Small Business Conciliation Service that would arbitrate in disputes over the speed of payments.

We’re waiting to see how that would work in practice, but we both agree that late payment is an important drag on business performance and needs to be tackled.

The vast majority of companies have good relationships with their suppliers, but some do take advantage and need to be held to account. To be a serial late payer is short sighted. It damages your own supply chain which, over time, damages you.

It also harms the wider reputation of business. We all know that public trust in business remains far too low. Only 53% people surveyed for the CBI by YouGov last year agreed that business makes a positive contribution to society. Why should the public trust businesses when some can’t even keep their promises to one another?

While government addresses business-to-business contracts, it also needs to put its own house in order. Public bodies, government included, must pay on time too – in many cases they are at the top of the supply chain. But, in the end, tackling late payment is primarily about securing a change in company behaviour, underpinned by more transparency on payment terms and performance.

Now more than ever the UK’s big and small companies, and those in between, need each other to be successful for business as a whole to prosper. We need to foster healthy, day-in-day-out collaboration while tackling bad practice where it exists. Doing that will drive growth in our economy and enhance the reputation of business in the eyes of the public too.

Mike Cherry is policy director for the Federation of Small Businesses (FSB) and John Cridland is director general of the Confederation of British Industry (CBI). The Great Business Debate was on Thursday 2 July.

Source: The Guardian

 

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