What kind of small businesses should we be nurturing?


By - Friday 4th August, 2017

In a multi part series, Sean Creighton explores the state of SMEs in Croydon and whether they help or hurt the community


Photo by Zach Baker for The Croydon Citizen.

The interim report of the Croydon Small Business Commission submitted to the cabinet in June opens up the debate on the future of the role of small and medium size businesses (SMEs) in the local economy. It raises some important issues and makes a series of practical recommendations with a timetabled action plan.

Unfortunately the report is limited because it does not address a range of issues which are important challenges for SME owners, managers, customers and residents. It may be that these will be addressed in the final report. These issues are not new to the commission because they were flagged up in a series of questions I submitted to it during its consultation period.

Business backbone

As the commission points out, SMEs account for 99.9% of all private sector businesses nationally. They employ 15.7 million people (60% of all private sector employment in the UK). They generate a combined annual turnover of £1.8 trillion, which represents a 47% share of all private sector turnover in the UK. They are the backbone of the UK economy as they drive growth, open new markets and create jobs. They are consistently described as seedbeds for innovation as they encourage competition and bring fresh ideas that challenge the status quo. This stimulus in turn incentivises others to adapt and innovate. 99% of Croydon’s business community are SMEs and their contribution is vital to unlock its full growth potential.

We need a wide-range of healthy SMEs in order to have a resilient local economy that can weather the economic crises that occur

SMEs allow us to avoid being dependent on large employers who might move out of the borough or reduce staff size as the Home Office did and the council has been forced to do because of government funding cuts.

Many aspects of the interim report will help to improve the council’s growth plan for the local economy which was adopted in 2014. At the time a Croydon TUC working party which I chaired recognised the important role of SMEs. It particularly emphasised the need to ensure there was availability of workspaces that SMEs can afford, which is an issue that the commission is concerned about.

Workspace

The working party argued that the plan rightly emphasised the importance of SMEs and start-ups, especially in the tech sector, which help with creating a diversity of employment opportunities and with growth.

These growing businesses might wish to stay in the borough if there is workspace accommodation appropriate to their expanding needs

The more the demand for modern office accommodation is satisfied it is likely that commercial rents will increase, which adversely affects affordability for SMEs and start-up businesses. Low rent spaces are needed for these.

It recommended that council owned blocks that are empty or underused could provide affordable accommodation for SMEs and start ups, especially in the tech sector. The council could also purchase blocks for the same purpose. It also proposed turning the council’s CCURV partnership with John Laing into more positive uses that will provide affordable workspace. The council went on to end that partnership, and make Davis House available as a SME hub.

Back in 2014 it was reported that 1,000 new businesses, mostly tech and digital, had opened between 2012 and 2014

Croydon’s attraction was not just workspace but also great support services and being in an environment that allows for collaboration and rapid growth. Many businesses had come here as rents increased in Shoreditch.

The working party pointed out that ‘the danger is that the same rent increase effect will happen in Croydon, forcing tech businesses to move to the next area identified as having cheaper rents.” It cited concern expressed at a Croydon Tech City meeting in December 2016 that it has become more and more difficult to find expansion space. The absence of a great many such units in Croydon makes it difficult for start up companies to grow.

The balance between expensive top-grade workspaces and cheaper ones was discussed as a problem during the Local Plan examination hearings. The council had to submit further evidence on new workspace development to the inspector.

The commission regards the issue of workspace to be very important

It recommends that the council should undertake a market assessment to look at the feasibility of utilising its suitable vacant assets to create affordable and flexible spaces for SMEs employing three or more people. It should develop a consortium of SME friendly landowners to encourage the provision of affordable business floor space in the borough to ensure Croydon remains one of the most affordable business locations in London.

It also wants the council to track the level of commercial, retail and leisure development more closely to identify what premises will become available and when.

Underused shop premises buildings

Back in the 1990s, I undertook a study of the Living Over The Shop initiative for a housing association. As a result, it received funding to undertake a pilot scheme to help shopkeepers bring the unused floors above their shops back into use. Such changes strengthen the finances of the businesses because it reduces their business rates and brings in rental or leasehold sales income.

The commission does not discuss this approach to strengthening SMEs finances. We need to know how many shop premises have upper floors which are underused or empty, how many shop premises do not have separate access to the upper floors and how many homes or workspaces could be created on upper floors of shops. There are many SMEs located in properties that at one time had been housing. Such businesses could be offered relocation to non-housing premises, releasing the properties for conversion back to housing use.

Sean Creighton

Sean Creighton

A former employee of and freelance project worker with community and voluntary organisations, Sean is active with Croydon Assembly, and Love Norbury Residents Associations Planning & Transport Committee. He is Chair of the Norbury Community Land Trust. He is a historian of Croydon and South-West London, and of British black, , social action and labour movement history. He co-ordinates the Samuel Coleridge-Taylor and Croydon Radical History Networks. He runs blog sites covering Croydon, Norbury and history events, issues and and news. He runs a small scale publishing imprint - History & Social Action Publications. He gives talks on a range of history topics and leads history walks.

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  • Robert Ward

    Thanks Sean, I really like the living over the shop idea. I have lived over a shop more than once. These are under-utilised spaces often well positioned. I presume there is no inventory of such space but shouldn’t be beyond us to construct one.