, Inspiration

Why Procurement Rules Kill Entrepreneurship

What is trending in the market at the minute? Corporations want their staff to be more entrepreneurial. And being an entrepreneur, start-up or freelancer is fashionable these days.


Technology has changed customer behavior and, with it, working patters. The next generations are tech savvy and highly demanding customers, have information at their fingertips 24/7, check out the competition via the web, and buy anywhere, anytime, using apps on smartphones.

Multinationals are trying to adapt to this shift by bringing in organizational behaviour consultants, implementing lean management and production, reducing costs by relocating or outsourcing, training their existing staff pool to do new jobs, or redesigning existing projects using agile process management.

Corporations want their staff to think and act fast. To be creative, connect the dots, think strategically, produce “glocally”, and fail fast before issuing an improved version of the new product or service. Some companies go as far as taking whole departments out of their office buildings so that they can flourish in an SME, high-tech environment.

Meanwhile, incubators are popping up everywhere, and both corporations and governments are subsidizing start-ups. It is good for business, boosting new business makes business sense and it certainly is politically correct.

Entrepreneurs and start-ups trying to get business off the ground have a can-do attitude. They work endless hours on their projects, they are solutions-orientated and open-minded. They are assertive and great at networking and selling their pitch. And this is how big corporations would like their employees to be.

There is, however, a catch-22 situation. Doing business with large companies or governmental institutions means you have to deal with procurement rules. If governments and multinationals were really keen on doing business with start-ups and freelancers they should ease up their procurement rules

And by real entrepreneurs I’m referring to the individuals who set up their own business, and depend on it for a living.

Those who have invested all their savings, turned their garage into an office or are working from the kitchen table. Those who leave corporations because they are fed up of office politics, poor management, boring jobs, glass ceilings or who have a business idea that they cannot wait to take to the market.

Employees who are paid to think and act as start-ups will, as usual, get their salary at the end of the month. So will all the people on the company boards, the procurement department staff, and the civil servants who award the grants.

Notice the difference?

Freelancers and start-ups cannot make a living if their invoices get paid 45–90 days after the work is done. No matter how entrepreneurial you are, you cannot get public sector contracts or aspire to do projects for Fortune 500 corporations unless you have savings or a very solid new business pipeline.

It might sound silly, but it’s that simple.

Procurement rules stifle entrepreneurship.

If governments, public institutions and companies want to promote the start-up-can-do-attitude in the long-term and on a sustainable basis, they should not only give subsidies or fund incubators, they should also seriously start considering changing their procurement rules and making them SME- friendly.

Laura Bacci


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