Magazine article Financial Management (UK)

Junior Kick-Start: The Economic Recovery Depends as Much on the Sprightliness of Smaller Firms as It Does on the Muscle of Multinationals, Writes Charles Tilley

Magazine article Financial Management (UK)

Junior Kick-Start: The Economic Recovery Depends as Much on the Sprightliness of Smaller Firms as It Does on the Muscle of Multinationals, Writes Charles Tilley

Article excerpt

In Germany they call them the Mittelstand, the hundreds of small and medium-sized firms that are the backbone of the country's export-orientated economy. In Silicon Valley they're the start-up businesses, often born in garages, that grow to rival the big corporations.

Wherever they are in the world, SMEs represent the lifeblood of commerce. They are an essential part of diversity in business, driving innovation and creating employment. Unlike their lumbering multinational counterparts, they are not bogged down by bureaucratic processes (someone once quipped that GM actually stood for "glacial movement"). What they lack in resources they make up for in agility.

In many regards, life in a non-listed SME looks appealing. With no public shareholders to worry about, they aren't subject to the vagaries of the capital markets. And the culture in small businesses is usually less macho than in bigger organisations--at least that's view of many of the most senior CIMA people who work closely with smaller companies. Above all, smaller firms can be crystal clear about what they want to achieve. Everyone knows what their business's objectives are. As one member of our technical committee put it recently There is no excuse in an SME for not knowing what works. The big challenge is implementing it."

But in the current climate there are many harsh realities facing SMEs as well. One is inevitably finance. The worst of the credit crunch is behind us, yet firms complain that banks are still saying one thing and doing another when it comes to funding small business. …

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