Here’s an irony for entrepreneurs to consider. On the one hand, launching your own business and pursuing its growth might be considered the ultimate capitalist pursuit; on the other, the growing backlash against the excesses of capitalism in many Western societies provides a golden opportunity for entrepreneurs to prosper.
Certainly, we live in an age where consumers increasingly regard companies with cynicism. Scandals ranging from the financial crisis of a decade ago to today’s rows over data access by large technology companies have led to a decline in trust in the corporate world. Edelman, the public relations company that each year surveys consumers’ trust of various groups in society, says almost one in two people no longer trust business.
However, not all business scores so badly. Edelman’s research suggests that in Western countries at least, larger businesses are much more likely to prompt mistrust than their smaller peers – around three-quarters of people say they trust small businesses.
That research mirrors similar findings elsewhere. A Pew Foundation survey a few years back, for example, found that more than two-thirds of Americans saw small businesses as having a positive influence on the country.
For small businesses themselves – and the entrepreneurs that lead them – this is potentially significant. It’s an advantage over larger companies to be exploited – and there aren’t too many of those around.
One avenue to pursue is the goodwill of customers. The Small Business Saturday events that have been going on in the UK and the US for several years now offer an example of how, when encouraged, shoppers are keen to support their local businesses, rather than the larger corporate chains. Last year alone, the organisers of Small Business Saturday in the UK estimated that customers spent £812m in small businesses, up from £748m the previous year. Given a choice between spending with a large anonymous company and a small local concern they know and people will very often go for the latter.
The other interesting area for entrepreneurs to exploit is funding. The rise of socially responsible investment and impact investment in recent years underlines an important trend in modern society: increasing numbers of investors are determined to ensure their money is used in a positive way. Simply put, they want to be sure they are doing good at the same time as doing well.
In the UK last year, ethical investing attracted around £17bn, a four-fold increase on a decade ago. Jenny Tooth, the chief executive of the UK Business Angels Association, says this increase is something that entrepreneurs in fund-raising mode should now be looking to tap into.
“We have seen a clear movement from investors to support smaller growing businesses, especially from seasoned, experienced investors who are looking to take a slightly more active role in the business they support,” says Tooth.
“This is one of the key pillars of angel investing, providing not only funds but also guidance and help to entrepreneurs. There is far more of a moral choice involved with supporting UK small businesses over the established companies that exist in the FTSE 100 and 250 [stock market indices].”
In other words, entrepreneurs raising money for smaller businesses that capture the imagination of investors looking to make a positive impact with their money are now pushing at an open door. It’s time to cash in on the trust that smaller businesses still enjoy.