The 2015 Project: SMEs – Collectively Powerful

By Kay Allen OBE Founding Director Trading for Good. This blog post is part of The 2015 Project – your chance to tell NCVO what our policy priorities should be.

The combined social value created by Britain’s smaller businesses is a vital ingredient for healthier stronger communities.

In 2012 there were an estimated 4.8 million businesses in the UK, which employed 23.9 million people, and had a combined turnover of £3,100 billion.[1]

These are big numbers. But it is the smaller businesses that really add the weight to our economy.

Small and medium enterprises (SMEs) accounted for 99.9 per cent of all private sector businesses in the UK, 59.1 per cent of private sector employment and 48.8 per cent of private sector turnover.

SMEs employed 14.1 million people and had a combined turnover of £1,500 billion

As one of the Founding Directors of Trading for Good I have spent the last 2 years talking to allsorts of small business owners to try and find out what they do to support their local community. As a result TFG now have some interesting insights into the behaviour of SMEs.

We have recently completed a Social Value report on behalf of one of our supporters, Fujitsu UK & I, which analysed the behaviour of a sample of the SMEs that work in their supply chain.

Our report showed that 60% of small businesses currently supported charities or had some kind of activity in the community. On average, in the last 12 months, our sample of SMEs each raised £1087 from fundraising, gave 200 hours of pro-bono work, donated £507 in cash to charity and completed 20 hours of volunteering.

Imagine those figures multiplied across Britain’s smaller businesses. That’s potentially millions of pounds being generated for good causes and local communities.

Half of the SMEs in our sample helped young people experience the world of work, offering everything for school talks, work experience and mentoring through to formal apprenticeships.

Most were doing something to reduce their impact on the environment, actively using conference calling, car sharing and recycling schemes to reduce carbon and save money.

Despite this collective strength, small business owners appear modest about the contribution they make to their communities and have no expectation of a return on the investment.

Most businesses did little to publicise what they did or actively marketed the impact of their involvement with community groups.

Our research indicated that SMEs do a lot more for communities than recipients realise and, more importantly, would do more if asked.

98% of SMEs in our sample said they would be more responsible if customers demanded to see evidence of ethical behaviour.

This finding indicates that if more primary buyers were to demand more evidence of social and environmental impact then smaller suppliers would respond positively. This finding supports the idea behind the Social Value Act 2013 championed by Chris White MP and The Rt Hon Hazel Blears MP.

Of course this is about market forces, if primary buyers want a shift in behaviour in social action then the leverage of supply chain influence is powerful. This change can be brought about, not by imposing procedural burden, more auditing and monitoring but by rewarding the right behaviour and sharing learning.

Small businesses find it challenging to shout about the great work they are doing. They can’t divert marketing resources away from the core running of the business. They just get on with community activities and volunteering.

And because they don’t tend to publicise their good work only 17% of Trading for Good members believe they have raised the profile/reputation of their organisation through taking action on social and environmental issue.

Publicising good works might not come naturally to SME owners, but showing the support they give their chosen charity or community group could benefit their business and lead to more donations for charities.

Our research indicates that UK consumers are leading the demand for ethical behaviour from businesses, large and small. This should trigger larger businesses to work smarter with their smaller partners in their supply chains. It should also help encourage smaller businesses to promote the work they do.

Smaller businesses should be proud of the added social value they generate in our economy. They should be confident in promoting the work they do but equally their customers should recognize this contribution and reward those businesses that do over and above the day job. That way every one can do well by doing good.

Trading for Good is a new digital platform that champions the work smaller businesses do in local communities. If you would like to shout about the great things your small business is doing then join Trading for Good today – Its Free!

For your chance to tell NCVO what we should be doing in our volunteering policy work answer our three quick questions.


[1] http://www.fsb.org.uk/stats

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2 Responses to The 2015 Project: SMEs – Collectively Powerful

  1. douglas morris says:

    Significantly no mention of the business classification “micro business”

    Why am I not surprised?

  2. Pat Reynolds says:

    Hi Douglas and Kay,

    I work for the Heritage Crafts Association. Almost 80% of craft businesses are sole traders without employees, and almost all are micro businesses. They’re a significant part of the English economy (GVA 4.4 billion – unfortunately no figures are available for the rest of the UK).

    My impression is that this sector is as committed to community action as the SMEs you analysed. I think it would be interesting to see what kind of volunteering is undertaken by SMEs and microbusinesses, and compare this with larger enterprises: my hunch is that the volunteering done by the smaller organizations is more likely to be highly skilled – be that teaching craft in a school, accountancy services for charities, building repairs for a community facility, or whatever the service or product of the SME/ME is.

    I would challenge the idea that “They can’t divert marketing resources away from the core running of the business.” Marketing is part of the core running of any business: if it makes business sense to market your product or service by shouting about the social good it achieves, you should do it. I would be interested, therefore, in seeing research into the benefits which SME/ME have found from marketing based on social action.