Are SMEs doing enough to attract big business contracts?
Big businesses remain reluctant to offer major contracts to SMEs, according to new research, despite growing pressures from the government.
It suggests that many SMEs are not doing enough to stand out from the crowd and that many are seen as too much of a risk to be involved with.
Two thirds of large businesses work with smaller contractors according to Achilles – who conducted the survey on behalf of consultancy firm IFF – yet less than a quarter of contracts are given to these smaller firms.
This means SMEs could be missing out on several large paydays – posing financial risks to those companies.
In some cases, a lack of larger contracts could even leave these smaller firms fending off the threat of company administration or even liquidation, if the financial situation really deteriorates.
Only 12% of procurement managers at the larger firms questioned said they intend to increase the number of contracts going to smaller firms.
Financial instability was of particular concern to them, as well as concerns over the capability to get the jobs done.
“SME suppliers must be prepared to do their bit in terms of raising standards, delivering value and putting themselves in the best possible position to win work,” said Achilles chief executive, Adrian Chamberlain.
The UK government is working towards introducing a whole host of new measures that will support collaboration between large and small firms.
However, these remain in the pipeline and there is no clear indication of when they will actually be introduced.
Essentially they mean that regulated businesses will not be able to favour large firms for contracts, while they will also be expected to explain why contracts are not broken down if it appears that SMEs are being excluded.
The government is targeting that 25% of all contracts to SMEs will come from the public sector by 2015, providing more opportunities and more options for sales.
This should provide many smaller businesses with access to increased levels of finance and high level projects – ideal for boosting their brand and reputation in the process.
By Phil Smith