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Small businesses, big ideas, little funding

On this episode

SMEs are the backbone of our economy, making up 90% of businesses worldwide and employing more than half of the global workforce. Yet despite their huge input, their path to success is rarely easy. Join us as we delve into SME’s evolving landscape and the barriers they face with New10 leadership team member Astrid Joosten and Richard Lim, CEO of Retail Economics.


Richard Lim

Richard Lim

CEO, Retail Economics

Richard previously headed up the ‘Retail Insight and Analytics’ team at the British Retail Consortium. Before that, he worked in mergers and acquisitions for Citi Group. He has a wealth of experience in data analytics, consumer research and macroeconomics, and is skilled in generating actionable insights for clients. Richard is based in London and has a keen interest in Behavioural Game Theory.

Astrid Joosten

Astrid Joosten

Leadership team, New10

At New10 Astrid is responsible for product development, user experience, data analytics, finance and risk management. As part of the New10 team, Astrid has the unique opportunity to apply her passion for change. She works with a lot of energy with all kinds of different colleagues towards a common goal: a continuously innovative proposition for SME entrepreneurs.


Nina Mohanty [00:00:04] Hi there and thanks for joining us for another episode of Architects of Change, a podcast brought to you by Mambu, the cloud banking platform to help you evolve your business. I'm your host for this episode, Nina Mohanty, co-founder of Bloom Money. In this episode, we're talking all about SMEs or small medium enterprises, often referred to as SMBs, small and medium businesses in the US. SMEs make up 99% of the business population here in the UK where I am, we're a nation of shopkeepers. But globally the approximately 400 million SMEs are the backbone of economies around the world. They are the main source of job creation globally, accounting for over 95% of firms and 60 to 70% of employment. By the end of the episode, whether you are a founder, employee or newcomer to the SME world, we hope to bring you up to date with everything you need to know about the businesses that are always being described as the backbones of our economies. To help me delve into this ever changing landscape, I'm pleased to say I'm joined by Astrid Joosten, part of the leadership team at New10, and Richard Lim, CEO of Retail Economics. Welcome both.

Astrid Joosten [00:01:26] Thank you.

Richard Lim [00:01:27] Thank you.

Nina Mohanty [00:01:27] So to start off, I think we need to define some things, we've already discussed with the acronym is SME - Small and Medium Enterprises. But Astrid, please, could you describe for us what is an SME? We hear that everywhere. What exactly is it?

Astrid Joosten [00:01:45] We can divide companies like SMEs because based on the turnover, the number of employees, the profit they make. But in the end, an SME is also an entrepreneur and I like to look at it not from a business or industry perspective. I know we do from banking, from financing, from the industry, but in the end it's an enterpreneur that is running this business, that has a goal, that has a dream, a purpose with this company. For the entrepreneur, it's important to run this business.

Nina Mohanty [00:02:20] I quite like that approach, which is not the way that many of us in the financial services industry look at SMEs, where it's X number of headcount, you know, less than 50, less than 100 or X amount in turnover, which makes you an SME, but really anyone who has an entrepreneurial goal or vision and sets out to achieve it, I love that. Course, we have colliding macro economic conditions right now, so it can be both a great time to start a small business, but also a challenging time to start a small business. Astrid, would you say this is similar to what you're saying?

Astrid Joosten [00:02:59] So you see a lot of online behaviour now and it's growing. So in the Netherlands there is no lockdown anymore and there is a reduction of online sales because people are spending their money now differently. So I'm curious how that will, I think it's a temporary one. Everyone is familiar nowadays with getting stuff online, so the easiness of things is there. And for enterpreneurs, that also means that during this period they were yeah, they need to be creative for how to run their business, not manually in a shop, but also have a solution, a digital. I think that that is definitely growing, not as fast as we would think, maybe, it is a trigger, an accelerator, I would say, but it's not hundred percent still where we would have expected that earlier.

Nina Mohanty [00:03:50] That's really interesting to me. So that you sitting at New10 and kind of getting to see this all from a high level position. But I wonder from your perspective at New10, but also just as a product person, how are you defining success in terms of growth for a small business right now in this brave new world that we're living in?

Astrid Joosten [00:04:13] It depends how the entrepreneur by itself defines his success, right? So from a financial industry perspective, we would like to see growth of the company to see if it's stable. And again, it can handle his business. But there are also companies that like to stabilised and don't have a growth ambition, for example. So it really depends. Or they have more a social entrepreneurial spirit instead of only profit and business.

Nina Mohanty [00:04:45] I like that. Perhaps me asking what is success look like is a bit like asking an average person what does happiness look like? It can be so subjective, depending who you are and what you're trying to achieve. Well, I guess a caveat to this conversation, of course, is that the SME landscape is ever changing. And of course, no two SMEs are the same, right? And as you rightfully said, Asterid, that it very much depends on who they are, what they're trying to achieve. But what things are we seeing right now, Richard, which seem to be contributing to their success based on this definition of success? The Asterid is shared with us. And are there any new considerations in what worked before that might not be working now anymore?

Richard Lim [00:05:33] Going back to what I was, what I touched on earlier around the shift towards digital and help businesses need to, to react and in many cases kind of shift their operations to embrace a more digital customer journey. I think in terms of how that can support success metrics, principally financial ones, I think that that's, you know, that's really important. I think the reality, though, is that for lots of small businesses, they often lack skills to be able to do that. There might be a kind of a skills gap in terms of what they have in the business and what they need to be able to transform their business digitally. So there's often a skills gap and that can be around anything from kind of optimising websites to optimising fulfilment and things like that. I think a lot of that skills gap is currently being filled by more innovative partnerships. So again, I think this is one of the key areas that we see successful businesses really manage to scale, you know, scale their operation through partnerships. Those partnerships can come in many different, different forms. Some of that might be in terms of logistics and be partnering with couriers to be able to, for example, take back online returns and get them back into the supply chain more efficiently. And some of those partnerships will deal with those reverse logistics and things like that. But in other ways, it might be just partnering with technology, partnering with some of the big tech platforms that might be with Amazon, eBay or Etsy or Shopify, but really trying to leverage the value that a lot of investment has gone into building that infrastructure to really try to, really try to kind of scale their business operations. And then I'd say finally in funding is really, really important and being able to partner with the right companies in order to finance efficiently and then have supportive funding partners that are going to support the growth of the business, again, is a really important attribute of success for SMEs.

Nina Mohanty [00:07:54] Well, Richard, you have made it wonderful for me to speak about funding because I think there is this idea that we constantly hear that SMEs are underfunded. And I think broadly the data does bear that out, that oftentimes that can be the case. But I think it's important that we do a bit of myth busting around SMEs. So we know that SMEs provide a vital backdrop for economies. So let's discuss the myths that surround them and why SMEs might not be as easy to sustain or might be actually more challenging to run than the average person might think. So first, we're going to get straight into it. The myth number one is under funding. First of all, there is the myth that there is a huge funding gap generally. Astrid, is this fair to say?

Astrid Joosten [00:08:50] Yes and no. So, like, if you look at the numbers, that would definitely be a yes because there are lots of SMEs and lots of them are also not financed. However, there is also a no because from my point of view there are opportunities to get the funding. And New10 was started to bridge the gap to get the funding for SMEs that they need because the regular, like the main bank approach where you need to reach out to a relationship manager, you have to deliver lots of documents, you have to wait to to know if you can get your funding, and that was difficult, and what we've changed is within 50 minutes you know if you can get money, yes or no, and how much you can get based on the input the entrepreneur itself is giving us and this is not difficult data. So it's familiar data because it's related to that company and this is the basic knowledge an entrepreneur also should have. So where Richard spoke about a gap in tech or in logistics, a consumer also can do a lot online at the moment, like with healthcare, with buying stuff, with banking, you can do everything beyond your computer or your phone. And we made that, that same feeling or experience for an entrepreneur to request the funding. So coming back to your question, there is still for a lot of SMEs maybe a data gap, but it's made more easy for SMEs to to get funding. It's sorry to say it's a yes and a no in there.

Nina Mohanty [00:10:34] Richard, I wanted to quickly go to you because, you know, a lot of governments like to say that they support small businesses, as we've said, multiple times, SMEs are the backbone of our economies, and many politicians like to say that when they're campaigning. But are governments actually good at supporting SMEs? Would you say?

Richard Lim [00:10:57] Of course you've got a different kind of spectrum of support across different countries. I think in the UK, I think probably there is an element of more support than in other countries that you see across the continent. But from a retail perspective, again it's, you know, it's really the retail sector for the UK is really, really important. Two thirds of the economy is consumer spending. A third of that is, you know, the retail sector. And actually, I think going back to the pandemic and the impacts of the pandemic and some of the measures that the government introduced in the UK and, of course, across the world quite, quite frankly, quite astonishing in the speed that they did it. So, you know, in the UK we had the furlough scheme, we had a business rates holidays and the business rates essentially a tax on property in the UK, for commercial property in the UK. So, you know, they stepped in, they put a business rates holiday in place. There was emergency loans that were made available to businesses. So actually, you know, without these measures that were put in place, given the nature of lockdowns and the impacts that the pandemic had on people's lifestyles in terms of the way they communicated and lived their lives and shopped, of course, it would have been a huge scar to the economy that was that was thankfully kind of alleviated by some of these measures. I think there is always more that they can do, though, of course. And a lot of that will come around, I think, you know, training and support. There's also some issues around a fairer tax system when it comes to business rates in the UK, and business rates have a really kind of old archaic system that is no longer fit for purpose in today's digital world. So some kind of more level playing field between, you know, bricks and mortar operations or pure online retailers that reflects the contribution they have towards the economy. And an economic wealth is definitely something that needs to be addressed and needs to be addressed urgently. There's still a skills issue within the UK that the government should step in and try to, to try to support as well. And that comes from essentially grassroots in terms of making sure that school leavers leave school with appropriate skills that are adequate for today's modern economy, where all of those skills are digital and a lot of those skills have relevance across all aspects of the various different industries in the economy. So I'll go back to Asterid, a bit of yes and a bit of no. There is support in place and it has been a lifeline for SMEs over the last couple of years. But absolutely there's still so much more that the Government can do in terms of support. And if I was going to pick one area in terms of the UK, it would be around business rates. You know, in some parts of the UK, the tax the retailers pay on their properties is higher than they pay on rents and it's just disproportionate burden on retailers that have a physical presence and it's not fit for purpose in today's digital world.

Nina Mohanty [00:14:04] That's fascinating. Who would have thunk, hey? Tax. Astrid, though, I wonder what you think in terms of if the government is supporting enough. Because one of the things well, Richard touched on it already was that there was a lot of action quite quickly from the government. But what I noticed from where I sit was that there was government mandates, but that actually needed a bit of partnership with the private sector. For example, the bounce back loans here in the UK, they needed a vehicle to get those out and oftentimes it was the fintech companies coming in and distributing those loans. I also love the idea of a bounce back loan where I think of, you know, someone on a trampoline bouncing back. But I wonder, would you agree with Richard that the government did a decent job or in general, are they doing a good job at supporting SMEs?

Astrid Joosten [00:14:56] I think they did a decent job and it's quite a challenge of course, and that there was a lot of support for, I think all companies. I can see in the Netherlands they created some new options for entrepreneurs and specific corona related loans and indeed they needed the fintechs and the banks to get these, these products to the entrepreneurs. So in the Netherlands, you had the the small corona loan. It took quite a long time to get it approved, so where government can learn, so we are talking about digitalisation and, and going online like the whole government surrounding is not digital by itself so they had to step up and I state I think they can do a lot more in making agreements or decision making and also facilitating online delivery of documents for entrepreneurs towards the government. So there is there is a gap where we are looking into opportunities to support entrepreneurs fully digital. The government is not by itself but from the the support perspective there was a lot of tech support and these loans and they needed us. So within New10 we we created a smooth journey specifically for Corona impacted companies. And after the formal approval, it I think it took sort of three or four months. Within a few hours we were live because we knew the product, the products, and we had a good journey so we could launch it quite fast. And we were able to facilitate around 50, 60% of all the entrepreneurs in the Netherlands for this product, all banks. So not only ABN Amro as we are a subsidiary of ABN Amro, but all Dutch banks. So we were one of the companies that supported most of the companies with this product. And that is a good learning because we we are digital already. So for us it was easy to put it in our sort of our product scope, but now we have still the process to register these loans and the extension of the loan last year. So at the end of December 2021, this product was going to stop. But then there was a new variant of Covid. It was like, Oh, no, so, oh, maybe this product should, should be extended. And it took them till the end of March to have that approved. And we said, we are not going to stop offering this product because we want to support clients that really need it. So we kept it open and I think that's the best to do. Even the government is still working on it. Try to do what we can to support these entrepreneurs. And I think what Richard also touched is we don't know what all this support now really means, because the support is ending also for for the tech support. And now it's it's time where we really will see what the impact is on the on the market.

Nina Mohanty [00:18:23] They were given a trampoline to bounce back, but let's see if there is a net to catch them once they do. Moving on to myth number two. This is one that I find very interesting, which is that SMEs need money to make money. So could a reason be that SMEs struggle is because they're having to deal with many different competing priorities. One which is, of course, making money because they have to. But also trying to do socially good work or to be, you know, very creative or dedicate it to whatever art or work that they are putting out there. So should SMEs be more focussed perhaps on ensuring that they are financially educated, that they have the right working processes, that they have the right tools like technology in place, as we've discussed a lot about already? Or is the answer simply that they just need better financial products? So Richard, you had a lot of thoughts on digital skills and the democratisation of digital. I wonder what you think about this.

Richard Lim [00:19:32] Ultimately, it depends on the aims and ambitions of the entrepreneur and the founder of these businesses. And there's many, many success stories out there where businesses have managed to to grow sustainably and haven't needed to access external capital or things like that. But I think this is really a question around ambition and speed as well. I think for most businesses, there's no doubt that when your starting off in your start-up, there's so many competing priorities for the business. Do I invest in people? Do I invest in technology? Do I invest in stock? Do I invest in, you know, there's a whole range of different opportunity costs and trade-offs between where to allocate your resources, and there's different growth pains at different stages of the business. A lot of that can be alleviated by access to capital and I think is really that trade off between speed and growth for most businesses.

Nina Mohanty [00:20:36] Moving on to another myth, and this is one that is very prevalent in my life but also prevalent within the SME industry, is that fintech is the answer, that fintech alone can save us. So more and more innovations are being developed on a daily basis. They make our lives easier, our businesses lives easier. But is the answer to a better SME economy simply improving the technology behind it? And I'm very interested on your perspective on this, Richard, because you've discussed the different partnerships, but there are also partnerships and tech enabled partnerships as well. So what would you say? Is FinTech doing enough here?

Richard Lim [00:21:21] FinTech plays a critical role in the SME, kind of, infrastructure and supporting the growth of businesses. There's just no doubt about that. But of course, it has lots of different, kind of, channels into business. It could be around funding, it could be around payments, it could be around even just supporting a better customer journey. So there's you know, there's lots of different areas of that. And one of the things that we've seen really kind of fast development of in the UK has been around customer payments and the growth of things like Buy Now, Pay Later. You know, that's one of the areas that has seen enormous growth in the UK, is something that consumers have really embraced. They like to have the flexibility to be able to spread payments or or delay payments to so they can better manage their, you know, their personal cash flow. For businesses, it also enables them to offer a better, you know, kind of a different variety of payment options as well. And for many businesses, what that what they help them with is build customer loyalty increases the frequency of purchasing and and essentially enhances loyalty of customers. So there's lots of different aspects of the fintech I think around customer payments is definitely one from a consumer's perspective has worked, that's worked really well. But of course, fintech from an operational perspective helps with international payments and making that more seamless. It can help with payroll really crucially as well. So we're seeing lots of kind of innovation around there and just being able to be more flexible with payroll for companies. So yeah, lots of innovation and definitely a key supportive role.

Nina Mohanty [00:23:09] Astrid, I wonder then if Richard thinks there's lots of great parts of fintech. Do you think fintech companies or banks are missing, kind of, some obvious gaps or key consideration when it comes to actually progressing technology? FinTech for SMEs. The reason I bring this up is something that you remarked on previously about what is manual and what is digital?

Astrid Joosten [00:23:33] For the like the bigger banks, it's quite difficult to change the whole business into a digital business. And where fintechs from day one are digital. So that is the biggest difference. And it's more easy from a fintech to to change or to improve their journey or the processes. And I fully agree with Richard that fintechs play a big role in in changing the environment, at least with trial and error. And they are sort of they have a mindset of deliver fast and also feel fast to learn and not sort of thinking out processes for a year and what is the best and then sort of have the like 100% true thing and just, yeah, put something live and learn together with clients. That is what in my opinion most of the fintechs do. They do it together with the enterpreneurs and with clients. So that is a different mindset where they can really change the world of financing and funding for entrepreneurs.

Nina Mohanty [00:24:40] And finally, one last myth is that the pandemic hasn't changed the SME landscape very much. So, you know, how has the SME landscape changed compared to how it was pre-pandemic and what we see now? And do you think we've seen the full effects of this, Astrid? The pandemic kind of forced everyone to be quite digital quite quickly, not just the SMEs, but as you've said repeatedly, you know, the actual offerings, the banks, the fintech companies serving them. So, you know, New10 works on an entirely digital basis. Were you better placed to continue this work when the pandemic hit?

Astrid Joosten [00:25:25] Yeah, we definitely were a better place because we were already set up as a digital solution for enterpreneurs. When New10 started or when the idea was born, it was six years ago and we were expecting that within five years the whole business or the finance requests would be online. So 100%. And we see based on the pandemic as well, that it is growing. And so now the final the last research showed that 40%. So it's still 60% not, but 40% is at least starting orienting for a financing need online. So there is still a big part that is not running the business or the debt part online and still yet go to their banker and their relationship manager. So it is growing. That's what we see.

Nina Mohanty [00:26:18] We've touched on before how the pandemic kind of moved us towards digital transformation and we talked about cost holidays and that sort of thing. But of the companies that have navigated the pandemic well across the entire digitalisation spectrum, so, you know, you've touched on logistics to banking, to social media, what do you think were the keys to success here? So was it something in particular like being open minded and quick to adapt, or was it adopting a technology faster that helps them get through the pandemic and perhaps even thrive?

Richard Lim [00:26:56] Agility. That is one of the key aspects for businesses to be able to react to shocks and uncertainty. And so just to put some numbers around that and touch on some of our research. But the shift towards online was enormous, in the UK and across Europe. Then we went through about 19% of sales online in 2019 to 28% in 2020 and then 29% last year. So between 2019 and 2020, we saw about five years worth of growth in just 12 months towards that. That shift was online. So the way that businesses had to react in terms of trying to embrace that kind of more digitalised customer journey, you know, it had to be fleet of foot. Businesses had to embrace disruption and they had to adapt in a really agile manner. And so I think agility is absolutely one of those key points. And I think further than that and peeling that layer back a little bit further, I think in context of the pandemic it is around just being more agile when it comes to digital technology. And so we kind of kind of touched on that phrase of a digital democratisation. But in the world of the next SME, I think there are so fewer barriers to entry than there were, kind of, a decade ago. You know, businesses have access to lots of different digital platforms, whether that's from the beginning of their journey in terms of supply chains and and digital aggregators, for being able to reach out to new suppliers in various different countries or having digital access to shipping merchants to be able to get the goods from one country to another. In terms of sales, there's been a huge kind of digitalisation around the big platforms and Shopify being one of those, kind of, key examples but Amazon and eBay. But then also when it comes to distribution and as we said, there's been a huge investment in having access to digital distribution platforms and courier services and even things like Dropshipping allows that. And then digitalisation at the final part of the customer journey when it comes to dealing with fulfilment and being able to track orders when, you know, how closely they are to being delivered at home or if there's a problem, you know, you can go online, there be a chat bot there that's ready to kind of answer key questions and things like that. So that kind of that shift towards digitalisation and companies embracing that disruption and becoming agile while they're doing so. I think it's been really, really important.

Nina Mohanty [00:29:40] To wrap up this conversation. I want to leave us with some parting thoughts, which is, first, the key considerations that SME owners should be thinking about or employees should be thinking about, but also what we can see from within those building for the SME space and and what can we do to encourage that growth and progress. So, Astrid, I'm going to go to you first. First, putting on the hat of that SME owner or that employee, you know, what are the considerations that we should be keeping in mind? And then the second hat is, as a builder of products for these people, what are you doing to encourage the growth and progress?

Astrid Joosten [00:30:21] I think the entrepreneur by itself should be served the best with all the solutions that are already available and so have at least an open mind. And look what is possible and ask, yeah, how others do it. I think there is a good network and entrepreneurs definitely help each other. From my point of view as a responsible for products is listen really carefully to the needs of the enterpreneur. I can translate or we can translate these needs into good solutions for them and we will definitely, definitely continue that and also the coming years for sure to support them.

Nina Mohanty [00:31:02] And Richard, wearing two different hats here. The first, you know, you are that small business owner. What are you thinking about? What are you keeping in mind? And then the second hat, as someone who's looking at this broader space, what would you counsel people building for the space to be thinking about.

Richard Lim [00:31:20] As a kind of a business owner? I think what's really important is to I think, as you said, this really eloquently is about listening, you know, listening to the market, listening to customers. And in the sake of, you know, the industry that I know best, if you look at retailers, you know, they need to listen to their customers needs and wants. And so for many families, households, you know, they're walking out of a pandemic into a cost of living crisis. And so they'll be looking at the different value sets that consumers have and their purchases are driven by a set of values. And much of that revolves around kind of cost, quality, experience, convenience and also sustainability and and the value that they attribute to retailers ethics as well. So, you know, there's there's this kind of constantly changing set of consumer values. And as we go into this cost of living crisis, what will come out of that is a more cost conscious consumer. And so businesses really need to listen to their consumers, listen to the pressures that they are under, and they need to kind of embrace and pivot their value proposition to align to what consumers want. So from a, from a business perspective, I think it's really important, yeah, to listen to the consumers and align with kind of a heading into this cost of living crisis and from a, from a business point of view, again, kind of I think, you know, agility is of course, really, really, really important, but you know, using data to make decisions and may even use retail economics to do that. But then they're also they'll also look at their customer data as well. But really being able to drive better insights through data and have data led decisions, you know, kind of like really, really important from that perspective.

Nina Mohanty [00:33:12] Great way to wrap it up. I want to thank you both so much for joining me for this fascinating episode on Small and Medium Enterprises. And that brings us to the end of the Architects of Change episode brought to you by Mambu. Today we busted some myths around small and medium enterprises, or SMEs, if you like to call them that. We talked about what an SME is and what success looks like for them. Astrid talked a lot about how we can be much more digital and agile and that there's a lot left to do in actually digitising the processes for SMEs. And Richard brought in a lot of interesting insight into how partners and tech partners are starting to add a lot of more flavour to the ecosystem and making it easier to democratise digital for SMEs as well. Thank you to my two guests today, Astrid Joosten and Richard Lim. If you'd like to delve into more of Astrid's work, please head to And if you wish to follow more of Richard's work, please head to For more Mambu podcasts, including the latest episode on the great resignation, head to wherever you get your podcasts. And don't forget to subscribe to our channels so you don't miss an episode. I've been your host, Nina Mohanty. See you on the next episode.

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