ITW Interview: Sarla Langdon


"Ignore the microbusiness at your peril." That's the message given to business support agencies by a new report on ICT and the microbusiness. They would do well to listen: statistics show that 95% of all businesses in the UK are microbusinesses (i.e., businesses with less than 10 employees), and that micro-sized firms account for 39.9% of all employment in businesses in Wales. itwales.com met with Sarla Langdon, author of the report, to find out why microbusinesses are so crucial to the Welsh economy, why they are being ignored, and how ICT is at the heart of the microbusiness renaissance .













Sarla Langdon, marketing consultant and proprietor at Markmaid Ltd., Technium Centre, Swansea.

itwales.com: In your report you define the microbusiness as being essentially different to the SME. Why should it be treated differently?

 It's different in almost every possible way. Every aspect of the micro business is different from the SME, and it needs a different kind of help. The SME is getting a lot of help, but this help, for many reasons, bypasses the microbusiness. What you really need is a similar package to the one the SME gets, but a package that's tailored for the microbusiness.

If people can understand that the packages tailored for very large businesses don't work for SMEs, and therefore that the SMEs need a special package, then it's about time that they understand that the microbusiness needs that attention even more so, because it's the base of the pyramid of our economy. Microbusinesses that employ less than 10 account for the broad 95% of all business in the UK and for more employment than the rest of business put together.

itwales.com: Politicians often talk about the SME, but `microbusiness' is not a term you hear very often. Do you think the concept needs to be used and understood more?

I think it does. I think the microbusiness is what everybody meant when they said `the silent majority'. These are people who toil morning, noon and night - they plod on, ignored by everybody, and somehow manage. But the new focus on entrepreneurship and on helping small businesses doesn't affect the microbusiness at all.

itwales.com: Is this something you've found in your own experience, being part of a microbusiness yourself?

As a microbusiness myself, most of my friends and colleagues, and most of my clients, are microbusinesses. They may have high turnovers, but they have less than 10 employees. It's the experience, it's seeing the pattern repeat itself over and over again that makes you think: somehow the microbusiness has been bypassed. Somebody's got to take note, and somebody has to lobby for these people, including myself.

itwales.com: You emphasise in your report that ICT has created microbusinesses and that it has improved the image of the microbusiness . Does ICT make the microbusiness even more significant?


I think it does on two counts. Firstly, that those working in ICT have improved the profile and have made it easier to talk about the microbusiness. They've improved the profile no end - the whole country understands now what the really small business is. There's glamour about the microbusiness. Most dot.com companies and software houses start out as microbusinesses.

On the other hand, the use of ICT in many companies has reduced their size to microbusiness size, and so ICT has played a pivotal role in the history and development of the microbusiness. What the microbusiness is at the moment is a product of ICT.

itwales.com: Will ICT continue to create more and more microbusinesses?

I believe that everyone has to go mean and lean. If Corus cuts down to a third from 10,000 employees, you just have to take that exponentially down to the SME with 50 or 250 employees and then down to the microbusiness.

With signing the Social Chapter at Maastricht, all the new regulations for employing new people have become onerous, but if you stay under 5 employees you can get away without adhering to these. There are many who split into 3 or 4 companies in order not to get under the evil grip of the Social Chapter, and so you find they multiply. And one of the ways to achieve this is to utilise ICT to its fullest extent. You then need fewer people, so the link between ICT and the microbusiness is very strongly established there.

itwales.com: There are a few ICT initiatives running in Wales at the moment that claim to cater for all sizes of business. But are support agencies really helping the microbusiness?

There are several levels of business support agencies. Many of the ICT initiatives no microbusiness has ever heard about and I would say that neither have 99% of businesses. They are something narcissistic that ICT people know about, but nobody outside knows about.

But there are other business support agencies micro businesses ought to know about and some of them do and they do approach them, but there are many difficulties. One difficulty is that business support agencies so far - it is changing - have round holes, and all these businesses have to fit into them. If they don't, then it's a case of `sorry, you can't be helped'. It is to the letter, not the spirit of the economic strategy of the DTI. Everything is followed in a bureaucratic fashion and that is a major problem.

I think we need higher quality business support people - it's all about people. There's nothing wrong with the strategies, the strategies are right, but the people are wrong.

itwales.com: And what we need are more initiatives in the mould of, for instance, Opportunity Wales, that tailors an ICT strategy to individual companies' needs?

Yes. As I mentioned, things are changing and again we have to thank ICT for it. It's because of ICT that it's been understood that every one of these tiny businesses is an individual, often physically an individual. It may be one person, or a person who employs 3 or 4 people, or 3 or 4 more. But really it is about that person. If that person disappears, the business is gone, unlike an SME that will run regardless whether the owner is there or not.

ICT takes credit for bringing to the attention of the rest of business support that it has to be tailor-made. The smaller the company the higher the quality of help it needs and the more closely targeted it needs to be. The bigger the company, the more general it can be because they have resources - all their staff - to patch up things that aren't quite right.

itwales.com: In terms of business support, would it be cost-effective to provide that level of tailor-made support to the many microbusinesses in Britain?

I think it has got to be looked at in perspective. We funded Lucky Goldstar, we funded Halla - millions and millions of our pounds went in there and they were giant international companies. They failed. They had to close down and go. SMEs are in an unfortunate position in the supply chains to the big companies: if the big company goes, they go.

So the question now arises, can we afford not to spend this money on the microbusiness? Because that's all we're gong to be left with if we don't look out. It would be dangerous not to, I would say .


itwales.com: On the report you mark out the single intellectual property microbusiness as being especially important for the economy. Why?

We've seen that because of high labour costs in the UK we out-price everybody in the world. We're too expensive. And so really the only thing we can export - especially with the pound as it is now - and the only thing that is selling and continues to sell, is invisibles. One of the major invisibles is know-how, technological know-how. We need to nurture ICT people more than anyone else.

Once again, what we have is the situation where the only governmental schemes - the innovation counsellors, et cetera - are aimed at larger companies. They completely forget that invention and innovation is the work of one person who has a vision. Mostly this one person is working in a large company. Nobody listens to him or her. So if they've got any gumption they leave and start their own company. But they then have no help whatsoever. Nothing is given to him or her. The whole innovation system of assisting companies bypasses them entirely because it's only one person or two people.

itwales.com: You mention in your report that microbusinesses face major financial hurdles and that there are no adequate micro credit facilities. How do you think this problem should be tackled?

There have been models. In Bangladesh there was such a model set up by the International Monetary Fund and the Bangladeshi National Bank. They gave micro credit to a farmer to buy a plough or to buy seed for example, or to buy a sewing machine for the farmer's wife so she could diversify. Small things.

They found it a complete nightmare. The point is that it is a mistake to do it in such a desperately poor country. You take the world's poorest country and you offer microcredit facilities, you are asking for it to be abused. The problem with poorer countries is the number of people. There's no accurate census, and there's no way of tracking them down because of the nature of the naming procedures they have.

But if you did it in a country like Britain it would be a completely different thing altogether. First of all it's rich enough for the microbusiness to be able to repay the loans. It would also be a genuine help - it wouldn't be actually trying to create a platform for the economy which is what they were trying to do in Bangladesh by actually providing turnkey help. Here, if you had someone asking for a sewing machine it would be to add to five others that they have, and that they need this extra one just to turn the corner. In Bangladesh you are talking about people who have never seen one before. It's a complete difference.

The other point here is that the micro credit would only be replacing the very high interest borrowings that the micro business does using credit cards, because credit cards are the way we run our business. If we didn't have credit cards we would die. These keep us alive because banks won't give us credit and there's no public fund small enough for our needs. This is absolutely absurd. These are extortionate rates, usurious rates. So what we've go to be looking at is to substitute the credit card with a soft loan; maybe to issue a credit card that has a very low rate of interest, a government credit card. That might be the answer.

itwales.com: It's surprising that there's no facility like it available. Why do you think the microbusiness has traditionally been ignored in this way?

I think it's a cultural thing. Culturally, from the medieval days and the guild system, people who started a microbusiness - a tiny retail shop or a farm or a bakery - have kept themselves to themselves, and this is a sociological phenomenon. They won't mix amongst themselves because of competition, so they segregate themselves from the mainstream. It's got nothing to do with the economy but it does have a bearing.

Now there has been an attempt to pull them into the mainstream because there is recognition that microbusinesses can't be ignored. But nobody seems to know how. Nobody seems to have focused enough to appreciate that they need help.

Their isolation is their own doing. It's a sociological, a cultural, a behavioural thing. But that does not mean they should be penalised for it. It's a self-defence mechanism that makes them isolate themselves.

itwales.com: So what we need to do is make them aware that they are a part of a wider group of people, even if they don't want to interact with others, just to make them politically relevant?

We did a survey of about 30 microbusinesses on a one-to-one basis. It was a small sample but we took two hours with each and every one. The results were quite amazing. The thing they complained about most of all was not the finance, it was the feeling of isolation. The second thing they complained most about was again not finance, but that they never seemed to know what was happening in their industry. It bypassed them. They're too small to find any interest in the Financial Times ; they're too small to read the business sections of the newspapers where occasionally you get an indication of where that industry is going.

itwales.com: Was the Internet helpful to these people? The whole purpose of the Internet and e-mail is to bring people together and to bring them information.

I believe that every single microbusiness ought to have e-mail and Internet as part of their business life and part of their business activity. It's simply that it's faster than writing letters, it's more reliable, it's there at the touch of a button and the capacity to learn more about your industry is enormous.

But once again, what we said about individually tailoring a programme for a company - such as Opportunity Wales with ICT - that's what's needed, because everyone's ICT requirements are different. People should be taught how to access information for their business. They can't be confused by a huge general lecture on how you access information period, because you won't hold their interest. They'll forget everything, and you'll have wasted your time and their time.

itwales.com: Do you think having a website gives credibility to a microbusiness? You can have a wonderful website and a very small business behind it.

I think that the future of microbusinesses is websites, that's going to be their main shop window. Advertising, for example, is just priced out of their market - they can't afford it. And if they were to do it properly they wouldn't have the capacity to fulfil the response they would get.

But the website is the perfect shop window. They can put all their capability down on it, which they can rarely do face-to-face, and they can't do it on brochures because they haven't the first idea how to write it, what to put in it.

This website is simply ideal. It's the future, completely. ICT is the answer to a lot of ills that face the microbusiness. The microbusiness and ICT are linked so closely that the microbusiness simply will not survive without it.

Contact Sarla Langdon at:

Markmaid Ltd
37 Ridgeway
Killay
Swansea SA2 7AT

Email: markmaid@btconnect.com
Tel: 01792 206271

To read Sarla Langdon's report on ICT and the microbusiness, click here.


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