Why the Small Business Commissioner matters to the UK economy

By David Vine, UK SMB MD, Concur

In July it was announced that The Department of Business, Innovation and Skills is set to formalise its support for SMEs and appoint a Small Business Commissioner. The announcement was met with some scepticism, as currently there are scant details about who the individual assuming this role will be, their remit and what powers they will be granted.

There are concerns from some quarters that the new commissioner could end up in the same position as Christine Tacon, Groceries Code Adjudicator. Tacon oversees the relationship between retailers and their suppliers, but despite asking in 2013 for the ability to fine retailers up to one per cent of their revenue for bad corporate behaviour, she has yet to receive a response. Critics say she is simply a window dresser – a role that became evident during the BBC documentary ‘Panorama: Trouble at Tesco.’

Late payments

Should the yet-to-be-appointed Small Business Commissioner find themselves in this position, I would argue that this would be a disaster for the UK economy as a whole. The statistics speak for themselves – small businesses are the powerhouse of the UK economy. At the start of last year, SMEs employed 15.2 million people and had a combined turnover of £1.6 trillion. The UK’s economic stability rests on ensuring that SMEs are provided with an operational and business environment within which they can flourish. Whilst the list of initiatives that could help businesses to prosper is a long one – business rates, rental rates and so on – there are two big overarching areas that I think need closer attention: late payments and cutting red tape.

Small businesses have been at the mercy of their customers for years, but the fact is that whilst a late payment might not matter to a worldwide corporation, to a small company it impacts their ability to forecast growth and, most crucially, it stops them from investing. If SMEs don’t feel able to invest in staff or technology, or spend money on stationery and business travel, suddenly the wheels of the whole economic ecosystem also start to creak. Investment breeds investment, it is as simple as that. Whilst the recent Zurich SME Risk Index painted a picture of confidence, it also revealed that 47 per cent are struggling to stay profitable and that they remain heavily reliant on just a few customers. This exacerbates the late payments situation – and the cash flow challenges they create – further still.

Championing the cause

The one thing the new role cannot do is introduce more bureaucracy. Late payments is one thing, but SMEs also need help on a number of difficult issues, in particular negotiating contracts and managing joint initiatives. Small businesses might be mighty in economic terms, but when it comes to the negotiating table, they often find themselves baffled by terms and conditions and other legal issues.

To ensure that they have the confidence to stand their ground, support on these matters is key along with access to a network of lawyers to help ensure that deals are sustainable, profitable and not subject to any dubious small print that benefits the larger organisation.

Alongside this, SMEs are crying out for an independent and authoritative resource that can provide strategic guidance on what they should be looking at within their business and the key areas that they need to focus on. For example, how can productivity be improved? How do they bring on board a non-exec? And for some it will be as simple as how to build a business plan. Back in the day, SMEs were able to pop into their local Business Link office, but with that support now gone, many don’t know who to turn to in order to get the advice they are seeking. As a result, we’ve seen lots of start-ups and entrepreneurs supporting each other, sharing knowledge and learnings. It’s great to see this community emerge, but I am sure all would welcome an official role that has the capacity to represent their interests at the highest level.

Whoever takes up the mantle of the Small Business Commissioner is going to need a broad range of experience. But most importantly they need to be a champion for good. To do this and really make a difference they will need grit and determination, but also legal powers. Without these, the Commissioner could come across as someone simply making empty threats and promises, not a real force for change. It’s not just small businesses that need this role to succeed, but the entire country.

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