How micro-businesses are key to the growth of the foundational economy

Lloyd Jones reflects on the Bevan Foundation’s latest report into business potential and the foundational economy in three valleys communities.

There has been an increasing interest in using the potential of the foundational economy to regenerate areas with weak economies like the south Wales valleys. Our recent report set out some of the experiences and opportunities of foundational businesses located in the three valleys communities we are working with – Treharris in Merthyr Tydfil, Treherbert in Rhondda Cynon Taf and Cwmafan in Neath Port Talbot.

In all three towns, the backbone of the business community are the small micro-businesses and the self-employed who make up the majority. There were a good mix of newer businesses opening as well as older, more established operations. This indicated that there are business people setting up and starting out but also a core of established businesses who have been able to ride out previous downturns.

Although some we spoke to found it tough to run a business – most had a turnover under £75,000 which means margins can be tight – they spoke of the advantages of where they are based. One said:

Local people know me and trust me in their homes and to help their family members.

The coronavirus pandemic has had an obvious effect on local businesses with a mix of experiences. Some businesses which relied on close physical contact and social gatherings had been hit hard. One said:

‘we’ve had no activity during this period’ and another: ‘we have had to close down completely’.

However, others sectors such as food and cleaning services became invaluable for many highlighting just how essential some businesses are. One business owner had experienced:

Lots of lines out of stock due to a rush in buying in the first couple of weeks.

Even within the sectors there were big differences, some child care providers were busier than ever, helping look after the children of key workers whereas others had to close altogether.

It was striking how many businesses had plans to expand before the pandemic, and despite the challenges of lockdown, are confident they can bounce back with the right help and support.

Based on our conversations with these local business, there is certainly potential for the foundational economy in each area. However, growth will be dependent on there being local businesses with the ability, skills and support to grasp the potential.

This will rely in part on effective support, tailored and with an understanding of their needs and circumstances.

It is also likely to require policies put in place to improve the availability of suitable premises for expansion, improvement of transport links and internet connectivity and the conversion of empty properties.

Lastly, we think that support and investment must reach places like the ones in our report, and recognise the importance of the businesses in them to people and communities. With the right interventions, the foundational economy can and should grow and benefit smaller settlements just as much as larger ones.

Lloyd Jones is a project support officer with the Bevan Foundation