Lesson for big corporates: Don’t treat your small business clients like domestic customers – it makes them grumpy

SMEs are the lifeblood of the NZ economy. But rather than feeling valued by big private and public sector organisations, many SMEs reckon they often fall through the cracks, being treated more like a glorified domestic customer

A common misconception is that people who leave large companies to set up as a SME business owners is that they move from being a small fish in a big pond to a big fish – or even the only fish – in a SME.

It may look like that from the outside, but the reality is very different. SME businesses who took part in the Listening Project research report they often feel more like a minnow when dealing with corporate suppliers and government agencies.

Having seen how the power of big business and how corporates are listened to and respected, it comes as a shock to SME business owners that they become almost invisible when they set up alone.

At best SME’s feel undervalued and not accorded the recognition they deserve and at worst they are incandescent with rage at the way they are treated by some suppliers.

The two issues that are their greatest source of pain come from two different directions. One is their treatment in the public sphere (central and local Government laws and regulations).

“Compliance costs appear to be on the increase (particularly anyone doing business within the Auckland Super City will probably agree) and these real costs come straight off of the bottom line.”

Although individually small and with their heads down getting by day to day, they are still part of the business community and have clear views on government policy. They are concerned that on the one hand they don’t have a voice on the other hand they may be the group most affected.

“I think the one of the biggest, or potentially biggest things we will be facing as small to medium businesses is the trade agreement that's presently on the table - the Trans Pacific Partnership Agreement, which could seriously impede small business development in New Zealand, by making it very difficult for cottage industries to operate much less get off the ground.”

 "This country has enjoyed an entrepreneurial 'can-do' attitude for a long time, and it's what made this little country stand out, but it is in danger of being caught in the stranglehold of 'free-trade'."

SMEs don’t think they should be exempt from the need to follow good business practice, but they do think they have special needs. For a small company the balance of administration time spent on documentation – especially around staff related issues – feels out of proportion. 

And the underlying tension here is a sense of one sidedness. They read enough business publications to know that whichever way you measure it – $ turnover, number of companies, number of people employed – SMEs account for a very significant part of the New Zealand economy.

The second thing that makes SME business owners grumpy is private sector suppliers, who can’t see beyond monthly spend figures and lump them in with domestic customers.

They may have a similar spend now, but they have different needs and if their suppliers can’t see that, then they feel they owe them no loyalty and are open to the next best offer that comes along.

So do SMEs have a chip on their shoulder or do they really have something to complain about? I’d say a bit of both. It’s certainly been enlightening seeing how our clients respond when we introduce them to our SMEs lives – and rewarding to hear them talk about how much better they can serve their needs in the future.

And SMEs will always feel a little bit invisible beside the big corporates and many organise themselves to deal with that, joining groups of similar companies to give themselves a greater presence.

So here’s the challenge for Government and big corporates with SME clients – develop your charter for working with SMEs.

SMEs should be different from both domestic customers and big business customers.

The top 5 wish list from our SMEs is:

  1. Create specific SME points of contact staffed with well-briefed people.
     
  2. Look at every process and get 5 steps down to 3, fold three different forms into one – cut down the admin.
     
  3. Give them a different scale, a SME specific scale – be it a price discount, a time scale or a volume issue – from other types of customers.
     
  4. Tell them they are a SME in your eyes - yes they know they are, but when you feel invisible it makes you feel great to know someone is acknowledging who you are and it implies special treatment.
     
  5. Learn about the SME market – they love to hear about other SMEs. It makes them feel less isolated. “I’ll have what she’s having” works just as well for SMEs, try  “other SMEs we work with do this”.

One of the motivations for our SMEs to take part in The Listening Project was to hear about what other SMEs are up to and earn recognition by association. It was also to learn which supplier companies others were working with – and the best of those may already be reaping the benefit.

 

Colleen Ryan is Head of Strategy at TRA and manages The Listening Project. The Listening Project provides a window into the real lives of New Zealanders.