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Back in the 1970s, Steve Jobs and Steve Wozniack were lucky enough to get 30-days of credit from their suppliers, as they built and sold the world’s first Apple computers from Jobs’s parents’ garage. The two Steves paid their debts from the proceeds, built another batch of Apples, and their business soared.
Rewind to that time and ask: what would have happened had that financing been unavailable? Would anyone have MacBooks, iPads, or iPhones today? Difficult to say—just as it’s hard to say how many other goodies the rest of us might have missed entirely because some entrepreneurs lacked the resources to go from the idea stage to full production.
The ambitions of small to mid-sized enterprises (SMEs) are often less lofty, but these businesses are still crucial to a country’s overall financial health. Whether it’s a product or service that fills an established need in a new way, or a concept so revolutionary that it changes how the world works, modest-sized businesses worldwide help strengthen the fabric of the overall economy.
Here, two huge supporters of start-ups and SMEs: David Pierce, Director of World Trade Centre in Dublin, and Marcela Navarro, Head of Customer Innovation at RBS, discussing the importance of access to markets for small businesses.
Symbiotic Relationships: Small Businesses, Big Businesses, and Banks
David Pierce, Director of the World Trade Center in Dublin, calls SMEs the “lifeblood” of the Irish economy.
Pierce notes that Ireland is a tech hotbed, pointing to mega players such as Google, LinkedIn, Facebook, Intel, Hewlett-Packard, and Apple, among others. Ireland’s other major industry sectors include life sciences, financial services, and agriculture. And, here too, large corporations dominate. So, why would Pierce consider SMEs so important in such an environment?
“Local SMEs supply products into these companies,” explains Pierce. While Facebook and Google grab the headlines, it’s the Irish SME that makes the system work.
“So, it is very important that SMEs are financed to support these big companies because without that SME sector support, those big companies won’t come to Ireland.”
Although SMEs have many of the same needs for financial services as the big corporations, banks can’t devote the same level of resources to understanding a two, three, five, or even fifty-person business as they would an Apple or Google. And without that understanding, it’s much harder to assess the risk associated with serving the SME.
For this and other reasons, Pierce, who spent about 35 years with Ulster Bank, first handling international business development for American companies’ locations in Ireland, and later, working with SMEs, says it’s essential for governments to offset some of the financial uncertainty inherent in supporting smaller enterprises.
Fortunately, governments are doing just that, funding loans and grants through banks, and creating other programs.
“Everybody is trying to find new products and ways of helping SMEs fund their businesses,” says Pierce, pointing to the Strategic Banking Corporation of Ireland (SBCI) as one example. This government-banking alliance takes some of the risk out of the equation for a bank, “supporting it with cheaper monies to lend to SME companies. That is working very well in providing working capital for finance,” says Pierce. “The government supports lower rates and less stringent criteria for the SME in getting the funding available.”
An established SME, for instance, might qualify for a loan through SBCI with an extended repayment holiday that reduces its cash flow risk. A start-up might be able to stretch out loan repayments to six years instead of the three it could otherwise qualify for.
SBCI is one piece of the Irish government’s commitment to SMEs. Enterprise Ireland is another. “Enterprise Ireland gives financial grants and subsidies and support for marketing overseas and also for education and training of employees,” says Pierce. “They also give them support to set up offices overseas.”
While Pierce says that government entities and banks probably could do even more, these programs are a promising beginning. They will help essential businesses expand their markets within Ireland as well as internationally.
Not Just Picking Winners—Providing a Market
Marcela Navarro, head of Customer Innovation for The Royal Bank of Scotland (RBS) in London, is a great believer in nurturing small and mid-size companies, both because of the positive social impact such support can have, and for pragmatic reasons. “In 2014, SMEs accounted for 99.3 per cent of all private businesses in the UK,” says Navarro. They also employed almost 50 percent of private sector employees—15.2 million people.
“We care about equal access for underrepresented groups in the supply chain, whether they are women owned, whether they are minority owned, or simply an SME that is not that well represented in the supply chain of corporations, including ours.”
While Navarro knows that SMEs need access to financing if they are to grow, she says they need: access to markets even more. “SMEs and innovators can be pretty off radar,” says Navarro. “They’re not on the High Street. You can’t look them up under ‘i’ in the Yellow Pages.”
So, in March 2014, Navarro launched The RBS Innovation Gateway, a unique program that helps innovative, diverse smaller businesses, including women-owned companies, develop ideas all the way from the concept-on-paper stage into marketable green solutions.
From the SMEs selected, RBS would get new, greener, more efficient solutions for energy, water, and waste disposal for its 2,500 buildings.
RBS Innovation Gateway solicited proposals from such businesses beginning in March 2014—offering grants of £3,000 to those companies selected to help develop their concepts and take them to market. In addition, winners are getting expert guidance from university-based subject matter experts to help them fine-tune and accelerate development.
Within 40 days, 141 SMEs had submitted their green ideas to RBS. To evaluate the submissions and provide collaborative support for those selected, Navarro enlisted an Innovation Panel of independent experts from Cambridge University and the Edinburgh Centre for Carbon Innovation, among others. Sixteen candidates were eventually selected to roll out their concepts on RBS properties; ten others were chosen for trials by RBS’s corporate partners, Carillion and BaxterStorey.
The technologies are currently being installed and results are expected within months.
Atlanta, US-based RAISE Energy Solutions is one that made the cut. This small woman-owned company developed a new, more efficient design for energy-saving LED lighting. Because it’s easier to install, it makes the retrofit a painless process.
Another winner was SEaB Energy of Southhampton in the UK, which manufactures small scale micro-power plants, made from converted shipping containers, that use a patented microbial-based technology to convert waste into energy.
One Gateway entrant from Cambridge, The Solar Cloth Company, made headlines when it was chosen as a finalist—and that brought it to the attention of a major local employer that has contracted with the SME to install its revolutionary flexible solar technology at their Cambridge car parks.
“From a business perspective, we are already seeing great growth potential for some of the SMEs going through the Gateway,” says Navarro, “with multi-million dollar contracts being discussed. This access to markets could lead to new production plants and significant job creation—which proves just how vital SMEs are to the economy and society, and how RBS is helping SMEs around the UK. “
Somewhere in that mix of innovators might be the next Jobs or Wozniak. You never know. What’s certain is that SMEs have too often found it difficult to get great ideas through the door at large corporations. With both financial support, and new efforts, such as the RBS Innovation Gateway to open up market access, that could be changing—and when it does, everyone benefits.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| HK2516 NTN | 25 | 32 | 16 |
| BK2512 NTN | 25 | 32 | 12 |