The best time to start a business...the hardest time to sustain it?
A couple of our entrepreneur idols talk about how brilliant today’s conditions are for entrepreneurs – 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.
And we completely agree – we founded and grew (are still growing) a consultancy that makes use of all of these and we're in the process of doing similar with a related tech start up.
But we can’t shake our growing concern about the challenges that we see coming down the line, particularly for small and medium businesses (SMEs). We shall explain!
🌪️ For those with physical infrastructure or supply chains, the effects of extreme weather (flooding, heat waves etc.) 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 – that might be short and sharp or long and sustained
☠️ The 2008 financial crisis and COVID-19 pandemic demonstrated SMEs are disproportionately impacted by economic challenges
🏦 If they 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 cannot afford to bring in the expertise to help them understand scenarios and develop strategies for something that’s so multifaceted, interconnected and uncertain.
In our work, we have the unusual (perhaps unique) perspective of both ends of the spectrum. We work with banks building their transition and climate risk strategies, who aren’t too worried about the near-term risk in their SME lending because the loans will mostly be up for renewal within 5 years (and if they don’t like the risk, they can choose not to re-invest).
And we also work with growing, ambitious, privately-owned SMEs who are already having to jump through complex hoops laid down by their stakeholders, asking for information that isn’t always relevant or possible – approaching climate as a tick box rather than supporting with practical real-world action.
⁉️ So 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?
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