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Small business is big business

Portland’s Louise Rutter and Tim Smith discuss the new CSR initiatives which demonstrate a successful collaborative approach between big and small business.

Business has come a long way from the view, popularised by Milton Friedman, that its sole social responsibility is to maximise profits. Few major companies now take such a restricted view of their obligations. Whether it is through their support for charitable or community causes or by reducing their impact on the environment, businesses now compete with each other to be seen to behave responsibly.

But CSR has the greatest impact and achieves the most worthwhile change when it forms part of a company’s core operations and addresses the greatest public concerns. Today, this can only mean the economy and, in particular, unemployment.

Over the last few months, we have seen a series of high-profile companies announce the creation of new jobs, with opportunities aimed in particular at the young or long-term unemployed. These jobs have been gratefully welcomed by Government ministers concerned at the relentless rise in the numbers out of work.

Such headline-making announcements are important, particularly as many of these jobs are in communities where employment opportunities are scarce. The performance of small businesses is just as crucial if we are to bring unemployment down.

There are over four million small businesses in the UK which employ nearly 60 per cent of Britain’s workforce. There is plenty of evidence demonstrating that it is SMEs which are the real engine of job creation. It is why there should be concern that for the second consecutive year, the number of small businesses failing exceeded the number of new start-ups. The SME economy is struggling and it needs a helping hand.

Big businesses are, of course, vital to the survival and success of smaller companies. They provide contracts and products small businesses can sell or use. But these large, and often multinational, companies can also have a great deal to offer small businesses outside the supply chain.

Increasingly, we are seeing imaginative initiatives which are enabling SMEs to tap into the experience and expertise of their bigger counterparts. These campaigns help smaller businesses prosper: creating jobs and stronger communities while also expanding markets and building loyalty and trust. With localism becoming increasingly powerful, it can also help multinationals show their positive impact within the community.

This has certainly been the experience of Google’s successful Getting British Business Online initiative. Trialled first in Liverpool and now being extended to Wales, the programme has helped hundreds of businesses make the most of the opportunities that being on the internet provides. A report by the Boston Consulting Group showed that businesses online grow four times faster than those that aren’t. By providing free tools and digital advice Google is helping small businesses to create professional websites and understand how to market themselves online.

Helping businesses get online enables SMEs to exploit opportunities. The work of the Business Finance Taskforce, set up by UK’s largest high street banks and the British Bankers’ Association in 2010, aimed to give small firms the confidence, knowledge and support to apply for loans and investment. After all, the banks want to loan to viable businesses.

The Better Business Finance initiative was rolled out from the Taskforce, with the banks meeting small businesses face-to-face at specially created events and providing support on how successfully to apply for loans, advice on the drafting of business plans as well as alternative sources of funding. Its national business mentors scheme, set up in conjunction with the government, continues to provide help to start ups and small businesses around the country.

Mentoring and education also lies at the heart of the Goldman Sachs 10,000 Small Businesses Programme. Aimed at those business men and women of established small enterprises looking to expand and take on more staff, receive high-quality education and practical support to help them develop and deliver business expansion plans. The programme, run across the country, offers both academic expertise and hands-on experience from successful business leaders and entrepreneurs.

So what are the ingredients of a good SME outreach? What at Portland have we seen work?

Firstly, mentoring is highly attractive to everyone from first-time entrepreneurs to successful mid-sized businesses looking for growth. In this very difficult economic climate, they are looking more than ever before to tap into proven experience and expertise. Advice and support is especially valuable because it builds personal relationships between companies which may be useful later down the line.

Secondly, there is an appetite for practical support. Finance departments understandably won’t be keen on straight forward donations or cash loans to small businesses. But lending products such as technologies or patents can be equally as effective in helping them grow and in creating long-term custom.

Finally, it is essential that businesses understand how any support or services they provide meet the needs of all involved. It is not simply a case of large businesses jumping on the CSR bandwagon. They must be seen to have a strong and bespoke package to offer SMEs if their efforts are to be deemed genuine and of course any publicity generated, to be positive.

It is hard to think of a time when there has been so much suspicion of big business. But nor has there been a greater call from SMEs for help. By getting on the front foot, major companies can underline their value to the economy and local communities and show that they see small businesses as both partners and friends.

Louise Rutter is a Senior Account Manager in the Communications team at Portland. She has experience managing communications strategies for clients including Google, NSPCC, Chorion and the Juvenile Diabetes Research Foundation.  Tim Smith, a Researcher in the Communications team, has worked across a range of sectors including political work at CCHQ and general communications work at a consumer PR agency and an IR consultancy.