Small and medium-sized enterprises (SMEs) are the key to economic growth: a loud refrain heard from all quarters in the UK these days.  A little less loud, but significant nonetheless, is an understanding amongst policy makers and practitioners of the importance of enterprise diversity, if the country is to fully grasp the opportunities for growth and social improvement.

Converting these policy insights into effective action and outcomes has been made more challenging, however, by the difficult economic and financial environment and the related retrenchment in the availability of business support.  At the same time, these difficulties are a real spur to imagination and innovation on these agendas.  There is a premium on inspiring and collaborative leadership to boost business survival and growth and to engage diverse communities in this process.

As outlined in our previous posts, a group of people from across the private and public sectors have established EDA (Enterprise and Diversity Alliance), a unique collaboration to pioneer new ways of promoting development and growth of diverse SMEs through imaginative and productive relationships with large firms and private and public business service and finance providers.

Led by CREME and the University of Lancaster, EDA will provide leadership in two areas which evidence suggests are key barriers to SMEs’ survival and growth and to maximising their contribution to the country’s economic growth.  Two working groups have been established to develop and deliver action plans, one around access to finance and the other around access to markets.  Both working groups will be underpinned by approaches that deepen the engagement of firms that have tended to be excluded from productive business networks and opportunities.

The access to finance working group will:

• In the short-term maintain and enhance communication with the network of SMEs developed through a series of workshops which brought minority ethnic owned enterprises together with experts in finance companies and professional business services.
• In the medium term organise further workshops around key issues facing SMEs to which SMEs and key professionals will be invited, combined with producing a tool kit for organising similar workshops around similar themes in other parts of the country.
• In the longer term work with Local Enterprise Partnerships to persuade them to promote access to finance to minority enterprises and to ensure that the planned national business monitoring network will include people with a successful track record of providing financial and professional advice to minority communities.  The ACCA, through the work of its members, has tremendous resources to contribute to these objectives.

Many of the difficulties of SMEs securing finance are related to misperceptions by bank staff of the potential of these firms and their owners and by the SMEs of the attitudes and ways of working of banks.  We want to create forums which help develop better mutual understanding between SMEs and finance providers to break open the financial constraints on minority SME growth.

Richard Roberts, SME Market Analysis Director and Chief Economist, Barclays UK Banking

The access to markets working group will:

• Develop further peer-to-peer mentoring groups together with corporate/SMEs mentoring processes based on a previous successful initiative between the 12/8 Group and A. F. Blakemore & Son Ltd These and other initiatives will develop the capacity of SMEs to guarantee a stable supply to large firms of quality products and services.  Building such resilience will address a major barrier to larger firms adopting supplier diversity policies.
• Make the business case for supplier diversity to senior managers of large purchasing organisations.
• Encourage the development of a commercially viable portal for SMEs to sell their wares to larger firms.

  We need to convince senior managers amongst large public and private purchasing organisations that there is a business case for supplier diversity, for example, the role it can play in encouraging innovation and in finding new markets.   We also need to provide easy-to-use tools to implement successful supplier diversity policies.

  Gerard Chick, Head of Knowledge Management, CIPS

  Supply relationships between large firms and SMEs are often not developed because of the extra time and costs of dealing with a larger number of suppliers.  Our aim is to bring together SMEs in partnerships that reduce these costs.

  Simon Leggett, Sales & Marketing Director, The Consortium

  EDA will be developing and delivering its action plans in the coming months and learning from its successes, and from its failures, so that knowledge flows from practice.   By doing this, and by disseminating good practice, EDA will be providing leadership and innovation to promote the survival and growth of diverse SMEs, discovering and opening up new pathways to success.

  A full briefing document about the launch of EDA can be obtained from Liz Frost at CREME at: efrost@dmu.ac.uk

  Previous posts:

  CREME sets out to make Diversity ‘Everyone’s Business’

  Access to Finance: Improving bank – minority enterprise relationships

  Access to Markets: Developing Corporate – Small Firm Relationships