Across the globe, business leaders have been frustrated by the failure of their banks to underwrite their expansion, job creation and growth.
The fact that bond yields have been going down whilst business profits have been improving demonstrates the breakdown of communication between the banks that have taken huge bailouts from central banks and small business that wants to expand.
There is a fundamental divide between the banks that have decided that shareholder interests are the measure of success and small business owners that accept that their relationship with their customers and the growth of their business is the key to success.
Lip service is paid to the role that smart companies play in generating new opportunities for work and turning job creation into economic development. More than half of total employment lies with small and medium enterprises that have other businesses as their clients and customers and who are being restrained by the focus of lenders on certainty.
In country after country, surveys show that small business owners, an increasingly disgruntled sector of the electorate, will be casting their votes with pocketbook issues at top of mind.
We need a significant increase in optimism as business owners are sitting on their cash until they see evidence that the worst is over. In America, 61% say the economy is on the mend, a stark increase from January 2011, when just 41% said they believed the worst effects were not behind us.
The economy and jobs are major pain points for small business owners today, with a majority citing the economy as one of their top concerns in making decisions to make further investments in their business network. Opposition parties delight in talking about gloom and doom to capitalise on dissent and government parties talk about big business investment rather than address household concerns.
Short-term traders enjoy promoting uncertainty and volatility as their key words, while longer-term investors are just looking for the end of the electoral cycles that determine yields and dividends. Confidence and compromise have become the go-to words for business leaders still sitting on their hands and a fist full of dollars.
Governments of all persuasions are starting to accept that the self-serving attitudes and internal currency manipulations have been at the expense of the small business owners and managers. Fund managers who have been slowing down international trading flows and hoarding bonus-generating opportunities are being exposed on both sides of the pond,
Ian Davis of McKinsey argues: “The great, long-running debate about business’s role in society is currently caught between two contrasting, and tired, ideological positions.
On one side of the current debate are those who argue that, to borrow Milton Friedman’s phrase, “the business of business is business.” This belief, most established in Anglo-Saxon economies, implies that social issues are peripheral to the challenges of corporate management. The sole legitimate purpose of business is to create shareholder value.
“On the other side are the proponents of corporate social responsibility, a rapidly growing, rather fuzzy movement encompassing companies that claim that they already practise the principles of CSR and skeptical advocacy groups arguing that they must go further in mitigating their social impact.” says Davis.
This is a false divide. It fails to address the fact that most entrepreneurs and small business owners start out to fill a gap in the market, meet a need that has not been met, and build their business on the basis of closeness to their customers rather than making profits for the people who have backed them into their business.
It is vital that smart company leaders remember that the business of business is the growth of their business. By next Monday we will have digested the US labour market figures, the launch of the latest Apple mini-toy, and the Europeans will have reached a new deal for their banks. We can only be sure of one thing – customers are coming back into the market and expect good deals and great service.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.
