For the past 20 years, successive governments have pushed entrepreneurial policies, claiming that they are the party for business.
We live in a time where we are told that a free market, with private companies competing against one another, leads to innovation and growth. You only have to walk down your local high street to see the numerous independent retailers that have set up shop in the past year. All of them are adding to the record number of start-up firms that were recorded last year.
However, after talking to Paul Uppal this week, the head of the government-run Small Business Commission charity, I found out that a third of all payments by large companies to small companies are late. In the UK, by law, business contracts must be paid within a thirty-day payment period. Paul added that this obligation is being continuously ignored by bigger businesses, who are using myriad excuses, including error forms, to delay payment, imperilling small companies’ cash flow.
Moreover, in 2017 the Guardian produced a case study on Holly Jade O’Leary who suffered a mental health breakdown due to continuously suffering from late payments. She was “hallucinating, hearing voices and unable to sleep or concentrate” after working with a business who became untrustworthy. A survey of 1,000 small enterprise owners with cash flow problems found that more than a third have sacrificed their own salary because of late payments, with over 20% being forced to sell their homes.
It seems to me that governments, past and present, have ignored such rule-breaking and aimed their policies at monopolistic companies that can stifle and engulf local and start up business.
Yet, what upsets me the most is the trickle-down effect it is having. The ‘horse and sparrow’ theory implies that if you feed the horse enough oats, some will pass through to the sparrows. This economic theory has been criticised in recent years but seems to work perfectly in supressing small businesses, who are now delaying their own payments to other small retailers, and putting independent stores out of business to stay on good terms with their business elders.
The effect is detrimental.
Elaine White from the Natural Entrepreneurs Workspace in York offers a microcosm for local business operating in towns and cities across the UK. She said that numerous independent stores have been close to folding, have had to cut costs or have lost employees to lower-paying but more secure jobs.
My father worked at Portakabin in York for 36 years. He still fondly recalls the collaborating between labourers to achieve success for both themselves and each other. He, like many others, still longs for this communitarian spirit in companies that united workers.
That unity may have been lost through the Thatcher era, demolishing the miners’ strength in numbers, but I believe it can manifest itself once more if local businesses work together and stand up to larger retailers. There must be more transparency, and a requirement for businesses to report on their payment, practices and performances.
As Paul rightly notes, sums of money can now be transferred by the click of a button and therefore bureaucratic inefficiencies are no excuse to leave a small business stranded and strapped for cash. The Small Business Commissioner provides advice about disputes and contracts whilst speaking out about the struggles some small business owners endure, but to work it needs a collective effort, creating a voice that can publicly denounce unprofessional practices.
Now more than ever cities rely on local businesses to thrive as large companies flee from the high street and persuade shoppers to look online. Soon, they could be all that’s left, or there could be nothing at all if they don’t unite and stand up to big business.