Government should help small business not just big business
Governments challenged to do as much for small businesses as they do for listed companies
Governments need to invest as much effort in supporting small businesses as they have in supporting the large listed companies claims ACCA (the Association of Chartered Certified Accountants).
In a report launched today (12th March), the global body for professional accountants also urges countries to share best practice on how best to support their small businesses as it is this sector which will be critical to economic recovery. Its policy paper Supporting Enterprise Globally says that Small and Medium Enterprises (SMEs) around the world face similar obstacles, including limited resources, management capacity and lack of bargaining power compared with large companies.
Despite the very different business environments in which they operate, entrepreneurs around the world report similar concerns relating to their ability to raise finance, pay taxes, win public sector contracts, get paid on time or comply with regulations, the paper says. ACCA, which has more than 63,000 members working for or advising small businesses, hopes the paper, which was launched at an event in Lahore, Pakistan, will help facilitate the sharing of best practice across the world.
Rosana Mirkovic, SME Senior Policy Adviser at ACCA said:
“There has been a great deal of effort going into restoring the well being of large companies. But it is the small firms which make up the majority of businesses, making significant contributions to employment opportunities and innovation. Tackling their concerns urgently is crucial in the current global economic climate.
“ SMEs around the world are likely to experience problems raising capital, in terms of not having collateral to bargain with, not being able to present a convincing case to lenders and or being unable to afford the cost of finance, a situation made worse by the recent economic conditions.” said Rosana Mirkovic.
“Small firms can also struggle in complying with regulations; lacking time, resources as well as internal expertise to handle red tape. In fact, the smallest companies can incur more than five times the administrative burden per employee than larger firms.
“And while large companies have enjoyed close relationships with governments, standard setters and financial institutions, small firms are invariably more difficult to reach and research, as well as represent effectively to policy makers and other important stakeholders.”
ACCA Chief Executive Helen Brand said:
“Policy makers need to ‘think small first‘, paying particular attention to understanding the diverse needs of this sector, especially now that SMEs are likely to face increasing pressures in their business environment. In order for regulators and governments to provide appropriately designed business support, regulatory and legal environments, tax systems, external finance and other crucial factors which affect the sector’s performance, there needs to be a better understanding of the diversity of this sector and a greater sharing of best practice in order to more effectively address its needs.”