When I set up Purple Shoots 12 years ago, it was to address the glaring hole in financial services around lending to the very small business. I’m using the word “very” because the term “small business” is applied so broadly now, encompassing businesses with turnovers of up to £10m, and even “micro-business” covers those with turnovers up to £2m. By “very small business” I mean the sole traders starting with nothing, seeking to build a better future for themselves and their families – carpenters, haridressers, cafes and shops, in fact a huge range of business types, but all sharing one particular characteristic and that is that they are universally (in the UK at least) undervalued and overlooked as contributors to the economy.
Purple Shoots is a rare, almost unique, lender in the UK who is prepared to lend to this client group to enable them to start businesses. Our clients include people with health issues and disabilities, people from minority ethnic groups including refugees, ex-offenders, ex-carers, single mums and single dads, people struggling to find employment and struggling on the margins of our economy. Anyone with these characteristics will find it impossible to borrow from any other lender to start a business because they will invariably have a low credit score, are seen as “high risk” because they have no money behind them, and because there is a widespread belief that if they are struggling on the margins of the economy, it is somehow their fault.
Will Snell, CEO of the Fairness Foundation *, talks about the “meritocratic myth” – the belief held by many that those who have achieved material wealth have done so through their own merit and ignores the role of luck. He goes on to say “The unavoidable implication of this is that people who do not share their success have failed for reasons within their own control, rather than being held back by systems and structures outside their control. Stories of “rags to riches” social mobility serve to legitimise inequality by suggesting that anyone can make it if they try, insinuating that those who haven’t made it simply haven’t tried hard enough”. I think this attitude is underneath many of the systems which fail to recognize the value these people and their small businesses bring to communities and individuals, and therefore the almost complete absence of any financial support for them.
I remember voicing my frustration to a friend once at yet another failed attempt to get financial support for Purple Shoots and her response was quite profound. She said: “No one else believes in or supports your clients, Karen, so why do you think anyone will support you?”
We did a survey recently of some of our clients, just to see how ambitious they are and how much they grow – because they are generally dismissed by others as “lifestyle businesses” with no ambitions to grow (although I am not sure what is wrong with that) and the results surprised even me: Turnover from a standing start and within 1-2 years was between £10k and £250k, all of the respondents were employing between 1 and 5 people and all of them had clear visions for growth and expansion. These are all people written off by everyone else and who would be contributing to the statistics on economic inactivity if we had not supported them.
Economic growth happens best from the ground up and is hampered by inequality – good reasons, quite apart from our growing evidence base, that there needs to be an attitudinal shift and a systems shift so that a proper value is placed on the “very small business” and its owner.
References: * (1) The rise and fall of the Meritwokecracy | LinkedIn
