It is hard to deny that in recent years, many of the UK’s high streets and business parks have seemed emptier, but there always seem to be some companies that outlast the others.
Have you ever stopped and wondered why this is? There is a growing body of evidence that points to the additional resilience that comes from being part of a tight-knit business community.
Business associations, local chambers and community partnerships create ongoing opportunities to share information and exchange ideas, as well as flag new challenges in the area – be it new competition or a sudden drop in footfall.
Communities with robust social networks and local systems are far quicker to act after a shock and that connectedness works best when it combines both personal relationships and trust in local institutions.
We clearly see that in many of the small towns across Scotland, the Borders and beyond, where many of our clients are based.
The local business communities that turn out to be strongest are the ones where these relationships already existed before they were needed, since long-term relationship building tends to slip down the priority list when owners are focused on day-to-day operations.
Of course, a sudden failure within a local supply chain can have the opposite effect, as when a business in a network runs into difficulty, the effects ripple out to suppliers, customers and neighbouring businesses.
The Scottish Government’s own Rural Scotland Business Panel found that the most common supply chain actions were using more locally sourced supplies (48 per cent) and using more supplies from inside the UK (47 per cent), with over half of businesses focusing on resilience.
If you get more granular, a recent academic case study from University of the West of Scotland that explored the Scottish beef supply chain specifically identified supplier relationship management, supplier selection and supply base diversity as core capabilities underpinning resilience.
There’s a well-established UK model behind this that is worth considering when you are planning how and where your business spends its money and shows support.
Historic research using the New Economics Foundation’s Local Multiplier 3 model found that £10 spent at a local business delivers £25 in total economic benefit to the local economy, compared to just £14 when spent at a supermarket.
A related FSB study found that every £1 spent by a local authority with local SMEs generated an additional 63p of benefit for the local economy, compared to just 40p from large local firms.
It all makes sense when you think about it as money spent locally circulates through local wages, local suppliers and local services multiple times before it leaves the area, whereas money spent with a national chain or an online retailer largely leaves after one pass.
There is a strong theme around familiarity and trust within local organisations when it comes to communities getting through disruption and uncertainty.
Communities with robust social networks and effective local systems are far quicker to act after a shock and that connectedness works best when it combines both personal relationships and trust in local institutions.
If your business has so far shunned the idea of joining a local business group or association, you shouldn’t overlook the benefits, despite the investment of time and membership fees.
The connection that you build may make it far easier to get insights that add value or prevent disruption and it will inevitably open the door to new commercial relationships and the sharing of resources.
As an accountancy firm with strong local connections, we have seen ourselves the benefit of joining and playing an active role in the local business community.
It helps us assist our clients, as we are able to point out local trends, help them make connections with customers, suppliers and other advisers who share the same local knowledge, while also ensuring more word of mouth referrals for our own services.
We like to think that as a firm that’s actually embedded in the local business community, who knows the other local suppliers, referral partners and lenders and who has relationships that predate any particular crisis, is functionally part of a client’s own resilience network.
If you would like to explore ways of improving your business’s resilience in uncertain times, please speak to our team.
