Edition 519 – Corporate Thuggery

A family business, employing less than 10 staff, with turnover in the $3 to $5 million range, works in a really interesting space. They’re highly skilled at what they do, and they’re in demand for their expertise, and their ability to solve a problem, that most can’t deal with.

One of their clients is a multi national organisation. Huge. You’ve heard the name, but I won’t mention it here. Suffice to say that last year, their global turnover was north of $130 billion.

Large corporate approaches small family business, and says we desperately need you on a job. Only you can solve the problem for us. Can you do it for us?

Small family business indicates their willingness and receives the spec sheet for the contract. There’s the usual stuff about LDs (Liquidated Damages) and minimum Insurance requirements. And, there’s something else. Something monumental. A deal breaker for the small family business.

Large corporate wants 90 day payment terms! 90 days!

Employees of this small family business are to be paid weekly. Suppliers, monthly. The ATO, monthly as well. Yet, the large corporate insists on not paying for 90 days.

Guess how much money the global corporate has in the bank at the end of the financial year? $25 billion dollars. And yet they insist on 90 days trading terms with their suppliers.

This is not just unethical behaviour. It’s corporate thuggery, plain and simple.

It’s the abuse of economic power, which means the family of the small business has to put everything it owns on the line, to fund those 90 days where the cash is only going out, and not coming in.

Whilst I hear the arguments that “they don’t need to work with them” from some of you, the fact is, that unless small and family business stands up to this type of behaviour, and is backed by legislative action from the State and Federal Governments and some teeth from the Australian Small Business and Family Enterprise Ombudsman, it only continues.

When 60% of GDP is generated by small and family business, and they employ close to two-thirds of the workforce, my point is this – without them, the economy would not function. Tax revenues would dry up. Big projects would never get started, let alone completed.

Now is the time to call out this corporate thuggery and enforce change in their behaviour and their attitudes.

This Week’s Tip

“When large corporate wax lyrically about their “stakeholders” you wonder if that includes their small and family business suppliers, without whom their business would cease to function.”