THE ESSENTIAL ROLE OF BUSINESS

How Small Business Helps To Fuel Economic Growth

On Monday evening, Prime Minister Theresa May gave a major speech at a black-tie event at London’s Guildhall, criticising the global elite. In it, she said liberalisation and globalisation are forces for good, and free markets and tree trade are the best way to lift people out of poverty.

The Essential Role of Business

But in a nod to the anti-establishment feeling that gave rise to Trump’s election and the Brexit vote, she said that governments must help people who have seen “their jobs being outsourced and wages undercut.” The Prime Minister went on to make reference to company bosses who are suspicious that May has a “growing anti-business agenda”, after she criticised firms which fail their workers and targeted a rootless “global elite.”

Earlier in the month, in an interview with CNBC about what the US election could mean for business, former Medtronic CEO and Harvard Senior Fellow, Bill George, made the point that there had never been a Presidential candidate in his lifetime who hadn’t set out a pro-business policy agenda. He followed this up with an excellent article, ‘The Working Persons Cry From The Heart,’ explaining what he’s sees as the responsibilities of business going forward.

Over the past few days, as I’ve reflected on both the Brexit vote and the result of the US election, I’ve been thinking about why business, in particular small business, is so important to our national interest. As a business owner, I’m fed up with hearing that business is responsible for the world’s problems. Unfettered globalisation and government policy that confined whole communities to the scrapheap must take its fair share of responsibility for the situation we find ourselves in. But business is the backbone of our economy and plays a hugely important role as a force for good. Here’s why.

The Role of Business In Local Employment

One of the biggest benefits of business to the local economy is the boost they give to employment in the region. Employment levels influence a range of standard-of-living metrics, such as the level of disposable income and home repossessions.

Evidence shows that SME businesses have contributed a disproportionately large amount to job creation here in the UK. (I’d be surprised if the stats vary significantly in the US, Canada and Australia). Between 2008 and 2013 a staggering 85% of new jobs in the UK were created by companies with fewer than 50 employees. We did that!

SMEs make a significant contribution to the UK economy: 15.6 million (60%) of all private sector jobs in the UK and £1.75 trillion (47%) of revenue per annum. They make up the majority of private sector employment and almost half of private sector turnover.

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Business Contribution To Economic Growth

SMEs contribute to their local economy by bringing growth and innovation to the community and providing employment opportunities. SMEs tend to attract more talented and innovative employees who invent new products and/ or implement new solutions for existing ideas. Larger companies often benefit from small businesses within their local community, as they use them to supply business functions they don’t provide themselves.

Adaptability to Changing Climates

If they’ve cultivated a loyal customer base and their staff are advocates, small businesses are nimble, with the capability to respond and adapt more quickly to changing economic climates than larger companies. This is because local customers remain loyal to their favourite small businesses in times of economic crisis. That customer loyalty means that small businesses are often able to stay afloat during tough times, which in turn strengthens local economies.

Local Taxes

In the US business pays a significant portion of all taxes, including income tax, property tax and employment tax. Having more businesses in the local economy boosts income from taxation, providing local government with more money to deliver and repair public services, including schools. This in turn provides jobs.

The Role of Business In Providing Access to Services

Business raises the standard of living by bringing a wider range of services and amenities to the local area. Here in Walthamstow where I live, the addition of a cinema has added an entertainment option for local residents of the borough that had been missing for years. The opening of our cinema has in turn brought more cafes and restaurants to the high street, while bringing in money from neighbouring areas.

Future Growth

And let’s remember that small businesses do not always stay small. PANDORA and White Company both started life as small businesses which have grown to become major players in the national marketplace, and in the case of PANDORA globally. Small businesses that grow into large companies often remain in the community in which they started, providing significant local job opportunities and thereby stimulating the local economy.

Conclusion

Business has an essential role to play in our community, and we as business leaders need to take that responsibility seriously. That’s why I love what Bill George used to say to his staff at Medtronic.

You make Medtronic successful by carrying out our mission to restore health to millions of people. You create the innovations in the labs, ensure that every product produced is of ‘unsurpassed quality’ and support doctors and nurses to ensure the patient’s health. My job is to create an environment where you can do your jobs well and be rewarded for it.” Losing sight of this principle endangers the social compact that makes capitalism work.”

CLICK HERE to start planning your 2017 budget and map out your financial plan for the year ahead.

Join The Conversation

Question: Are there any other reasons why you think business, especially SMEs, are important?

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I’m Denyse Whillier, a London based business coach and consultant. I guide entrepreneurs from across the globe to achieve profitable, scaleable growth and create businesses that are Built To Succeed™. Built To Succeed™ is my proven success system, developed during my 8 years in the trenches as a CEO, 25 years’ experience at senior leadership and managerial level and training at Cranfield School of Management, the UK’s leading business school. It’s this background that sets me apart and helps my clients to get BIG results.

I’d love to start a conversation. Simply use this link to arrange an informal Skype coffee chat. There’s no hard sell. Just solid advice and a straightforward, honest assessment of whether 1:1 business coaching (or business consultancy) would be a good fit for your business, the results you can expect and how to get started.

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