Conflicting pressures - potential for problems

There was an interesting piece by Mike Dennis in 'Talking Retail' just over a month ago (16 Jan) where he looks at the potential for opportunity for SMEs amidst the chaos of the growing number of closures and administration orders in the High Street.

I have noted a similar potential for SMEs and added that it is crucial for SMEs to remain focussed on the markets that they know and understand, provided that such a market is to continue in existence - changing shopping habits because of on-line provision, changing technologies, cultural and demographic changes can all substantially undermine previously solid markets. It is right nonetheless that SMEs look to the gaps being left in the market by defunct or retreating businesses with the purpose of exploiting these opportunities.

Unfortunately, there are signs that the credit crunch is having further unexpected impacts upon the trading environment of SME retailers and the threat appears to be coming from the Town Halls. There have been a number of reports in the press recently of local campaigns by small businesses - especially in market towns - against the introduction of parking charges where previously there were none, and raising the charges beyond the rate of inflation where charges already existed.

I believe that these measures are being adopted by local councils simply because it is easy to do and has a marginal effect of voter intentions; I believe also that it is foolish to introduce these kinds of charge changes without substantial and meaningful discussions with the local businesses. In an e-mail conversation that I had recently with an academic we had reason to discuss the interaction between local authorities and SME retailers and he emphasised the difficulties that exist in finding a mouthpiece for these smaller businesses. I did understand, and indeed have discussed this problem previously on this blog - but these logistical difficulties cannot be an excuse for not engaging with small businesses, especially where the impact of decisions has an impact on their businesses and their investments.

The period of recession will not last forever and the local High Streets will be sadder places if not only have they lost their Woolworths and their M&S food offer but that their independent businesses were also lost in an attempt by local authorities to balance the books.

Local Authorities should look after their SMEs

This subject has been a perennial topic for this blogger because it is one about which I feel passionate and it never ceases to astound me about the ways in which local authorities interact with the SME retailers in their areas of responsibility (and this doubtless applies equally to SMEs who are not retailers).

In case there is doubt this is not a side swipe against local authorities per se, but against those who find it easier to either discount, or to ignore, the plight of their local, often locally grown, entrepreneurs in favour of others and often it seems in name of expedience. The trouble is that local authorities in the main pay too little attention to their local investors because they are very often in the earlier stages of their corporate development; unlike many of their more established counterparts they are not cash rich and therefore less able to donate to the various local schemes that in the past decade or two have been a feature of town centre management.

There are some notable exceptions; Sheffield city council for example. In this authority area the leader of the council, as I have reported previously, announced to a gathering of small businesses that he was appointing a cabinet member to look after entrepreneurs and developing businesses. He was not being philanthropic but rather pragmatic. By establishing a clear line of communciations with these local business people he and his colleagues are considerably more likely to obtain realistic feedback of the impact of their decisions on local business and have a ready made structure for consulting with that particular constituency. All too many other authorities have no such mechanism and, it might even be argued, find dealing with small businesses is an altogether tiresome and time consuming occupation - far better then to just deal with the big boys and try and tap into their resources. OK, this may seem a great plan, but what happens when those big boys start getting the jitters, or indeed simply fail. Where's the contingency plan? Do the council officers rush unceremoniously, cap in hand, around the phalanx of small businesses in the hope that they can explain why these consistently good investors in the local economy have heretofore been studiously ignored.

In the press this week there have been reports of a town in Hertfordshire where the council have sympathised with the local traders for disrupting their Christmas trade while the council put their plans to pedestrianise into effect. Sympathy notwithstanding, if they had half a wit they might have stopped to consider the impact these actions might have had on these traders and have negotiated a satisfactory compromise; it might have been easily possible to continue trading effectively in such a circumstance if the traders needs and the council's needs had been shared and solutions sought before the event.

Just today I was chatting with a trader from Bilston in the West Midlands whose business is tied into a long lease in a centre that is becoming a little jaded through age where the local authority has acquired land immediately behind the businesses to provide car parking. From what I gather at least some if not all of these adjoining businesses had always had access to the rear of their premises and at least one had signed over, perhaps foolishly, to the council their rights of way to enable some disabled bays to be constructed. The council now wish to charge for keys to the gates that now bound and bar access to the rear entrances of these businesses. Frankly it beggars belief.

The message I would give to Councils is "think this one through" - these small businesses dedicate a massive proportion of their business investment in your town; they are promoters of your town and very often the owners are council tax payers in addition to Non-domestic rates payers. Create effective mechanisms, even if you have to fund it, for communicating with SMEs.

The message to SMEs is simple: "organise" - I realise that doing so will mean that someone will need to give of their time; but it is worth the effort in the long run. Do not let your Local authority work unchallenged in making changes to your businesses, but embrace those ideas that might be really useful to you.