The value of small businesses is not all about profit
Should business be all about profit? This used to be a no-brainer, but as we mark the tenth anniversary of the collapse of Lehman Brothers whilst figureheads like the Archbishop of Canterbury call our current economic model ‘broken’, it is clear that the textbook needs to be re-written.
Over a third of small businesses are not driven by profit. The traditional view is to see this lack of financial drive as a negative, a further indictment of the UK’s sluggish productivity. But this outlook totally misses the broader, richer value these businesses bring to our communities.
The 5.7 million small businesses across the UK are so often described as the “lifeblood of the economy”. But this does not get to the heart of the total value these small businesses provide, as powerful agents of change, opportunity and regeneration in their communities.
In 2002 there were just two full time jobs in a tiny remote community near the Isle of Mull. After investment into Drimnin Estate, the small business has more than trebled the amount of employees, encouraging younger people to move to the area. This is just one small, but powerful, example of the new life small businesses can inject into communities.
In the Small Business Community Impact report, peak b found over three-quarters of small businesses actively support local organisations. The same small business owners – faced with challenges from managing cash flow, to staffing – are also the ones stepping forward to give young people a break; or turning up to volunteer at the local hospital, school or food bank; or mentoring other businesses.
While big businesses focus on mission statements and corporate responsibility programmes, diversity strategies and quotas, it is amongst the ranks of the nation’s small businesses that we see the natural access point for new people or initiatives, and the incubation of a totally organic form of talent inclusion. This is demonstrated time and time again by the positive engagement small businesses have with groups such as refugees, ex-offenders, or other previously excluded, such as the long- term unemployed, or those with disabilities.
Small businesses are not all about profit – much of the time they are largely about people. Over a third of small businesses have kept on a member of staff when they didn’t commercially need them anymore, and almost half have created employment for an individual, to give them an opportunity, above and beyond the business’s needs. Over a third of small businesses are deliberately employing young people to give them an opportunity, while 17% employ people with mental health issues.
Many of the businesses seen as ‘unproductive’, are contributing to society in different ways, that we would not necessarily want to stop. The mistake we make is assuming these businesses need to change. They are creating far more value than is seen on the surface.
Small businesses create ideas, jobs, training, new products, new ways of working and much more. We need to start celebrating and rewarding their contribution to society, rather than writing them off as ‘small time’. There is a huge opportunity for the Government to leverage and grow the role that small businesses play in helping their communities and addressing issues like inequality.
A good place to start would be to create a new Community Impact Allowance to recognise and reward the small businesses helping their communities, particularly those creating opportunities for people furthest from the labour market. When you consider how often a small business has stepped up to give someone a break, it only seems fair that they should get a tax break of their own
Michelle Ovens MBE, Founder, peak b and Chair, Small Business Charter