Investing in SMEs
Governments must 'think small first'
13 Mar 2009
ACCA has launched a new report in which it urges governments to invest as much effort in supporting small businesses as they do larger listed companies.
Supporting Enterprise Globally calls for countries to share best practice on how to provide support to small businesses, as it is this sector that will be critical to economic recovery.
The report says that small and medium-sized 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 report similar concerns relating to their ability to raise finance, pay taxes, win public sector contracts, be paid on time or comply with regulations, the report says.
'There has been a great deal of effort going into restoring the well being of large companies,' said Rosana Mirkovic, ACCA SME senior policy adviser. '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.'
ACCA, which has more than 63,000 members working for or advising the SME sector, hopes the paper - launched at an event in Lahore, Pakistan - will help facilitate the sharing of best practice globally.
'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.
'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.
'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.'
Helen Brand, ACCA chief executive, 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.'