Recent Posts
Featured Posts

Large and Small Businesses: Providing an Excellent Service doesn't ensure survival


Systems ensure the Big Fish dominate

It really is not a level playing field. All types of Small Businesses find it impossible to compete with the Big Guys. This is not because Smaller Businesses provide a poorer service but because of all the barriers that Small Businesses face and Large Companies (Corporates) do not.

On the face of it one might think that a Business becomes Large because it provides a better service. However, it's not as straight forward as that. Indeed, it is more about money being poured in to corner the market. Effectively systems were created that prevented Small Businesses from expanding or even surviving and enabled wealthy investors to corner the market and cut Small Businesses out.

Some Examples:

Independent Valuation Surveyors - Conflict of Interests and Maximising Profits:

In the old days a Mortgage Institute would instruct an Independent Surveyor to provide a Valuation Report and the Buyer may ask for a Structural Survey. However, Banks and Building Societies came up with the idea of employing their own Surveyors - a 'One Stop Shop', where the Buyer could get their Mortgage and a Survey. Some Independent Surveyors were offered Jobs working for Banks, some were asked to act as Agents - selling Mortgages to Property Buyers.

Concern was expressed at the time about 'Conflict of Interests' . I.e. How could someone who was hoping to get commission on providing a mortgage on a property be trusted to provide an objective report on the condition of the property? I recall a Bank Employee asking a Surveyor I know if the Surveyor could possibly do less thorough inspections/reports because reports (by listing the property defects) were putting Buyers off buying the property and the Bank was thereby losing the sale of a mortgage/financial services. The Surveyor of course said he had to act in the Buyers best interest and report any defects he observed. The Bank counter-argued that legally the Surveyor would be covered by the 'small print' and that provided the value of the property was not affected, there was no significant problem in failing to report defects.

Independent Surveyors might only do one or two Surveys a day. When they were offered jobs working for Banks/Mortgage Institutes they were expected to cram in as many as 6 Valuation Surveys a day.

We can see therefore how standards paradoxically can be lowered by the 'Big Guys' for their financial gains/to maximise profits to the detriment of Clients: Firstly by reporting only according to the 'small print' (in order to facilitate more financial services sales) and secondly by crushing 6 Surveys in a day - wizzing round properties to maximise profits.

Banks/Building Societies also came up with the idea of 'Free Valuations'. Of course they were not really 'Free'. I.e. Banks/Building Societies were otherwise covering themselves for the costs incurred. One way or another the public always do pay. Nevertheless, public were taken in by such offers as 'Free Valuations'. In ways like this, the Big Guys were able to corner the market and cut out small Independent Surveying Companies.

One wonders why Governments did not perceive the importance of Independence and avoiding Conflicts of Interests. Additionally, the 'Free Market' paradoxically malfunctions to reduce competition enabling the Big Guys to dominate - operating as unofficial cartels and denying Small Businesses the opportunity to compete.

There are many other ways in which Small Businesses have been at a disadvantage against the Big Companies. For example:

1). Compulsory Professional Indemnity & Public Liability Insurance: Very expensive for the Small Company/Sole Practitioner,but easily affordable by Companies backed by Wealthy Investors

2). Compulsory Association Membership Fees: E.g.In the old days being a Qualified and Conscientious Plumber was good enough. But now Plumbers have to be Association Registered and some Small Companies simply could not afford to pay the Association Fees.

3). Compulsory Updating of Skills: This is a good idea. However, the high Fees that Associations/Institutes charge for Professional Development/Update Courses are too costly for a small business. Yet,it is not possible to continue unless Businesses meet the requirements to show they have updated their skills.

4). Business Rates: Only the multi-national Companies could afford to pay Business Rates. Hence most Town Centres are now identical - the same multi-national shops everywhere. Recently smaller businesses have received some help with rates, but it's too late - the Individual Small Shops have largely disappeared.

5).Out of Town Shopping Centres provided Free Parking, which further contributed to the demise of Traditional Town Centres. Planners facilitated the Big Fish at the expense of Small Fish.

6). Business by Internet: Setting up a website is easy enough, but directing potential customers to your website is the challenge. This is a lot easier for companies who can afford huge advertising and marketing bills. Again, this allows the Big Guys to corner the market and shut Smaller Companies out. Small Businesses don't get a look in on Google Ranking. Google claims Ranking is 'objective'. However, do a search for Products and Services and you will see that the Large Companies are always on the First Page and Small Businesses can't get a look in. Expensive marketing drives traffic to websites which in turn seems to favourably affect Google Rankings.

7). Accreditation: I recall enquiring about becoming an Accredited Centre for Teaching English. I was confident that we would provide high Teaching Standards. But high teaching standards alone is not enough. The set up fees to become an Accredited Centre are huge and thereafter Annual Fees are payable. Most of the money we earned from Teaching would have gone straight into the pockets of the Accreditation Companies. The Big Guys could buy luxury buildings/teaching facilities and this attracts Students. Moreover, Centres were not 'Accredited' purely on the basis of Exam Results, but on the basis rather of who could afford to pay the high costs of obtaining an Accreditation Certificate.

8). Money: Borrowing money from a Bank is risky - it takes time for a Business to establish a Reputation and Cash Flow problems can quickly arise. So much easier for people who are born wealthy to set up and develop a business, or for those who are lucky enough to meet an Investor.

There are criteria to meet for Business Grants, like - must employ so many staff, must have a certain turnover. Many Small Businesses are denied the support that larger businesses receive.

Large Companies receive £Millions in Subsidies. It is as though systems are malfunctioning to protect the Large Companies from competition and to block Small Businesses from becoming competitors.

9). Sole Practitioner Overload: The Self-employed Individual has to handle everything in the Business. On top of the actual work, they often do their own accounts, handle their own computer/technology issues,design/manage their own image/brand/marketing, handle all their own administration and telephone calls,etc. Especially in the initial years - they simply don't have the money to pay an Assistant/Consultants. Also, they don't have the sick or holiday pay that employees obtain.

For real competition, Governments need to facilitate the following:

Affordable Membership of Associations

Affordable Courses to Update Skills,

Affordable Insurance Premiums

Affordable General Business Overheads - like Business Rates,Marketing, Utilities

Apprenticeship Schemes for Small as well as Larger Businesses

Financing at very low or no interest rates rather than have Business Loans that benefit Banks a lot more than they do Small Businesses.

Until such barriers are lifted there is no level playing field, no real competition and paradoxically the Businesses that survive and grow do not necessarily provide a better service but just have the capital and clout to grow and dominate the market that others cannot afford to get into.

Being the best is just not good enough.


Follow Us
No tags yet.
Search By Tags
Archive
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
Bulgarian British Partnership Property, Language and Business