The best time to start a business — and perhaps the hardest time to sustain it?
A couple of our entrepreneur idols talk about how brilliant today's conditions are for founders: with AI as your sounding board, a plethora of marketing tools at your fingertips, and a range of low-code or no-code tech, you can get so much further on a shoestring than ever before. We completely agree — we founded and grew a consultancy that makes use of all of these.
But we can't shake our growing concern about the challenges coming down the line for small and medium businesses.
For those with physical infrastructure or supply chains, the effects of extreme weather — flooding, heat waves — may already be felt and are set to worsen. Regardless of whether governments take rapid, slow, or no policy action, there will be a meaningful negative impact on the economy from climate change. The 2008 financial crisis and COVID-19 pandemic demonstrated that SMEs are disproportionately impacted by economic challenges.
If SMEs supply large corporates, have investors or lenders, or buy insurance, they'll increasingly be penalised for not knowing about or not being able to mitigate their climate risk. Yet they often cannot afford to bring in the expertise to help them understand scenarios and develop strategies for something so multifaceted, interconnected, and uncertain.
In our work, we have the unusual perspective of both ends of the spectrum. We work with banks building their transition and climate risk strategies — who aren't too worried about near-term risk in their SME lending because the loans will mostly be up for renewal within five years. And we also work with growing, ambitious, privately-owned SMEs who are already having to jump through complex hoops laid down by their stakeholders, approaching climate as a tick-box rather than receiving support with practical, real-world action.
Where will this leave us in five years, when the weather and economic pressures have built up and the time comes for renewing loans or investment?
