Small is Bountiful – by Benedict Dellot

If you were able to start from scratch, what kind of a local economy would you create?

Would it be one dominated by a handful of large firms, with local people dependent on out of town employers for jobs, and identikit high streets where chain stores rule the roost?  Or would it be an economy that prioritises colour and character, with a constellation of independent, homegrown firms that create meaningful jobs on the doorsteps of local people?  Most of us of course want the latter, so why do we settle for the former?

chocolate-524749_1280Primarily because we’ve come to believe that small businesses can’t offer us the prosperity that large businesses can.

Theory has it that small firms don’t have the economies of scale to be productive, the resources to be innovative, or the wherewithal to provide decent, well paid jobs.

Small isn’t beautiful, small is fragile.

Our starting point is to call for an end to generalisations.  When you’re dealing with a community of nearly 5 million micro businesses, it’s impossible to make sweeping statements that stand up to scrutiny.

The economy and the labour market are highly diverse and complex systems. What is true of small firms in the manufacturing industry is almost certain to be different for small firms in the logistics, technology or financial sectors.

Indeed, one of the points made is that micro businesses are thriving in those industries that are bound up in intimacy, empathy and authenticity – such as social care, health care and education. All sectors where scale isn’t an enabler but rather an inhibitor.

Why micro businesses are returning to prominence in our economy? Technology is part of the answer. But so too are shifting demographics, changing values, evolving consumer tastes and new corporate business models.

Benedict Dellot, Associate Director, Economy, Enterprise and Manufacturing, RSA