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Business Leadership

by Nigel Peters


Is Big Business Benefitting At The Expense Of Small Business?

With their recent move from Centre Point in Tottenham Court Road, to Cannon Street here in the City, the CBI have come a lot closer to us and it’s been great to attend some of their events across the road and meet some of our fellow members. However, their most recent event, at the historic Birbeck College, was especially interesting.

CBI/FSB Great Business Debate

Hosted by both the CBI and the Federation of Small Businesses, the event was centred around the age-old David and Goliath question: ‘Is big business benefitting at the expense of small business?” Alongside the hosts, the panel featured an impressive line up including BBC journalist Maxine Mawhinney; CEO of Creative Nature, Julianne Ponan; and Amazon UK & Ireland Policy Director, Lesley Smith. What followed was a lively and controversial debate, all trying to answer the subject.

Some of the points raised were through provoking e.g. did big companies take too much risk in the downturn, pushing risk down the supply chain? The interdependency of small and large businesses is so important, especially while our economy is buzzing - but late payments and behaviours of big companies can still be an issue. All businesses understand that the natural corrective position is about holding cash. And some big businesses still do. But it is important that large companies both do this and manage their supply chain by ‘acting local’. This is the responsibility of big business Finance Directors.

For government, it is about enabling and managing the debt and providing education to create the right environment. There are now 600,000 more small businesses and so their voice is better heard – small businesses represent 40% of turnover in the UK and they now have a dedicated minister. I believe that regulation is important, but it can kill innovation in the market. I think the key point is value not cost, and building relationships.

Ways Big Business Can Help Small Business

Beside enabling prompt payment practices and working with government, there are also other ways that big businesses can help smaller ones. I believe they should work with small firms to bring new technologies, giving opportunities to small businesses and helping them access export markets in goods or services

Having listened to and reflected on the opinions raised around the question of whether big business benefits at the expense of small business, my answer is yes. But it is more about the need to enable small businesses to develop, and operate, to bring the new ideas, the disruptive technologies and the innovation, so that they can grow into the new big businesses, as well as enabling these big organisations to be more agile and succeed. It is a cycle and one that must be maintained. It is not just prompt payment, but the understanding of value that small businesses bring.

For example in the public sector, to enable longer contracts to small companies, the frameworks and the contracting environments have to change to allow small businesses to win work. Re-tendering, OJEU and frameworks are often not supportive of small businesses and this needs to change. In the private sector, especially with big businesses, it is about the finance director and procurement teams understanding the value of small organisations and allowing them to bring their support and skills - not just challenging them on margin or payment practices.

From our perspective, we work with 13,000 small personal service companies/businesses (PSCs) to bring talent to big business quickly. Yet so often we see them being challenged and authorities not understanding the risk taken and services provided by PSCs. Big businesses also need to refresh their procurement approach to enable the small business to bring the skills and ideas to help them achieve the key aim in today’s marketplace – growth.

To find out more about the above event you can take a look at The Great Business Debate website. You can also read a write up of what was discussed here, look through what people were saying about the debate on Twitter here, and listen to a podcast from the panel here. You can also take a look at the joint article written by John Cridland (CBI) and Mike Cherry (FSB) on the relationship between big and small business here, which was first published on The Guardian Small Business Network.

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About the Author

Nigel Peters

As well as his strategic role of Managing Partner, Nigel also has responsibility for the Private Sector practice. Heading up this division, Nigel and his team are responsible for the immediate provision of senior interims and transformation teams to lead business solutions across a wide span of the private sector from FTSE 250/100 to private equity and AIM listed businesses. His team provide director level and senior management roles across the traditional functional areas such as HR, finance, IT and procurement, as well as business leaders to deliver transformational change and integration expertise.

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