SMEs put the buzz into business
Micro-firms are the worker bees of the economy.
They provide the thousand-and-one services that keep business going, contribute to the community, and help us keep our daily lives on track.
They are the one-man bands; the partnerships, and the family businesses. They’re the people in the kiosk at the station serving your coffee in the morning. They’re the people who come and fix your heating. They might be the person who keeps your books and files your tax return. They may fall far below the notice of the bigger companies who grab the headlines in the business pages – but they are utterly indispensable.
And added together, their combined activity represents a significant chunk of the economy. Small and medium-sized enterprises (SMEs) represent about 90% of businesses and more than 50% of employment worldwide.
They continue to suffer – commercially personally – amid the pandemic, rising costs and economic upheaval.
Research from ACCA and The Corporate Finance Network reveals that financial pressure is causing a dramatic spike in reports of worsening mental health in the UK SME sector.
In just three months the numbers reporting worsened mental health has more than doubled, from 13% in March to 35% in June, according to our new poll. The mental health outlook in UK SMEs is poor, with data showing similar levels of distress to those experienced at the peak of the pandemic.
While we are considering the plight of SMEs now, it’s worth remembering that some of the world’s mightiest businesses – Apple, Microsoft, Ford, Amazon – all began with individuals starting out with little more than an idea and a dream. The tiny business of today is potentially the economic powerhouse of tomorrow.
They are sometimes disregarded in strategies to tackle the biggest business challenge of our time – how we re-wire our economy to build in sustainability amid the threat of climate disaster.
At ACCA we believe that SMEs can make a huge contribution to the drive for sustainability.
That’s why when the UN marked Micro, Small and Medium-sized Enterprises (MSMEs) Day on 27 June, we joined with business management consultant Profit Impact to publish the latest in a series of sustainability toolkits for micro-firms.
This is the right time for micro-firms to take action for greater sustainability in areas including:
Supply chains. Big organisations are under growing statutory pressure to make supply chains more sustainable. Those requirements are gradually cascading to SMEs down the supply chain.
Cost management. Water and energy efficiency, recycling and waste reduction all offer chances to streamline operations and improve profit.
Attracting talent. If small businesses have plans to grow and recruit, younger workers in particular are attracted to organisations with values that reflect their own, and which take a strong stand on social and environmental issues. A purpose-driven business can make SMEs more attractive to talented staff.
Securing investment. Lenders and investors increasingly expect commitment to sustainable business practices.
Financial professionals, such as ACCA accountants, can offer plenty of help and act as trusted advisors for micro-firms which want to become more sustainable . They can
- explain the business case for sustainability
- identify and evaluate risk
- advise on reporting frameworks
- provide the data and analysis to chart progress and set and meet targets
- help gain access to government incentives and grants
- Facilitate networking and information sharing on sustainability issues between local businesses in chambers of commerce and industry organisations
Global environmental and social challenges can only be met if SMEs are fully involved. This is an opportunity for SMEs, far more than it is a problem.
Sarah Whale FCCA, founder of Profit Impact, said: ‘Embracing our sustainable future creates significant opportunities for SMEs to build resilience for themselves, our society, our planet, and our economy. Often this will lead to a reduction of costs, increased talent attraction, and favourable investment rates to develop business. As well as providing a point of differentiation, and improvement of their brand reputation, these are all important reasons for SMEs to understand and engage with our sustainable future.’
The problems are too big to ignore. And small businesses can make a huge difference in finding the answers.