Telling the truth about SME life today

Nurture the green shoots?

Watching entrepreneurship in the midst of a recession is a great thing. The media blares doom and despair – and down the street, two new shops open.

Economists predict poverty and disaster, but in the networks and cafés and meeting rooms across the country, business goes on. Everything you hear from pundits is already history.

Meanwhile, entrepreneurs are already hard at work building the future because they are too busy to let themselves be distracted by the past. These are my heroes: not the bank managers asking for higher salaries and more job security, but the visionaries who know that you can’t time the market.

I’m inspired by the two new stores that have opened in my neighbourhood recently. They’re both retail outlets and, this being my home patch, I think they’ve defined their markets pretty well. They sell things that people around here like and want and can’t easily find elsewhere. That’s got to be a good start. But both these stores are a little bare; they have big spaces (I guess rents are low) but they lack inventory. What this says to me is that they’re probably under-capitalised. And chances are that the bank wasn’t eager to loan them money.

What they need now is help. Even if they’d like to, their bank managers probably won’t have the freedom or courage to help them. The place for start-ups to find help is from their suppliers.

Every business – especially, but not exclusively, retail businesses – depends on suppliers. The symbiosis is unbreakable: if a start-up thrives, its suppliers do, too. That means that all vendors have a vested interest in the success of every new company they sell to.

So what should they be doing” Renting inventory, providing it on a sale-or-return basis or providing it at big, start-up discounts.

But this isn’t what’s happening. I spoke to one supplier who told me: “I don’t want to let them have too much – they might go bust.” Well they certainly will if the shop looks bleak.

Turn the space into a cornucopia and you might keep your new customer, even participate in growth. A little empathy and a smidgen of imagination and, surely, both parties grow” Forget about turning to the government for help. Do what entrepreneurs have always done – be bold and help one another!

The data says that start-ups born in a recession have as good a chance of succeeding as those born in boom times. Why is that” Well, think of all the things going for a start-up during hard times: it’s easier than ever to find highly qualified, experienced staff who may be more willing than ever to take a chance on a new business; salaries are lower; you may even take on staff or consultants in return for sweat equity from those whose redundancy payments give them the financial cushion they need to be able to afford to work for you.

Moreover, the kinds of partners you need – manufacturers, designers, marketers – are far more open to helping a newcomer than they’ll be in boom times when their books are bursting. And if your product is right, the poor, beleaguered and depressed consumer will be thrilled to try something original.

One start-up veteran told me that birthing your business in a recession is like going on holiday in the off season: costs are down and the welcome is a good deal warmer.

But no business thrives alone. So, when a nervous newbie, worried about cash flow and unable or unwilling to make big guarantees, comes to you asking for help, remember: when the good times return, this could be your keystone customer. Gouge them and the recovery will take a little while longer. Help them and you can ride a rising tide together.

Picture: source



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