The problem with business support.

The problem with business support.

I was talking with some friends who have been involved in business support activities for over twenty years. I asked them why we seem to get it wrong so often. We have evolved from an enormous Small Business Service and Business Link to trifling Growth Hubs floating in an ocean of thousands of business support providers. Regional Growth Fund money goes unspent and business leaders are left bewildered by the hundreds of schemes that offer the impossible with a guaranteed return to the provider rather than any actual positive and sustainable impact on the business.

Ministers, desperate to show how entrepreneurial they have made the UK, are complicit in a measuring system (jobs or GVA) that is completely anecdotal and gives the service provider the opportunity to exaggerate without any supporting evidence the number of jobs created or, say, the value of export orders predicted. Supporting business growth (the ecosystem as it is called today) is a long term project and as such means that any Minister planting his or her seeds today will not reap any benefits before they move on to some politically more meaningful role and indeed may even end up handing over an opportunity to the opposition.

This is essentially our problem. We don't have a cross party, long term, properly funded programme for business support the same way we don't have it for infrastructure (roads, rail, aviation, ports and broadband). Vital ingredients in the life cycle of small and medium sized businesses are overlooked in favour of the chance to get a picture in the media with a hard hat and a shovel announcing some foreign owned corporation building a warehouse on some recently rescued brownfield.

We don't go anywhere as far as our American colleagues do, where the state is ostensibly the R&D department for a powerful corporate lobby: corporations who do not want to risk the cost of innovation. Mariana Mazzucato has already shown us how governments can assist economic growth by helping businesses grow and in fact if you just tear out the appendix to her book The Entrepreneurial State, you have your strategy on a plate.

Not all businesses want help. Not all businesses have the means by which they can use help. There are too many business leaders wanting something for nothing: a train to gain for business growth. They are unable to manage their own business cash flow and so grab onto any opportunity to bolster their working capital.

How do you identify the right businesses to support? Any centralised system with a CRM and a help desk (or business solutions centre) operated by a university, local authority or Growth Hub is doomed to under perform with dismal market penetration. The business leaders you need to talk to will not beat a path to you no matter how good your bacon sandwiches are or however lucrative the referral fees are. Sorry, I have that wrong: there are plenty of intermediaries who provide great breakfast meetings to delegates that are miles away from the growth businesses we need to identify. When I go to networking events or awards dinners I see the same professional service providers time and time again. The real business leaders are in the office working and I often realise too late that I should be to.

There is an answer. It's not a 10 point plan with two 8s. It hasn't got any pillars. It is very straight forward: do the same to small and medium sized businesses as we have done to HE students. The taxpayer money involved in the grants scheme that my peer group were brought up on is now collateralized into student loans with an interest rate of between RPI and RPI plus 3% on a sliding scale dependent on the income of the former student once they get a job.

Why don't we encourage businesses to borrow whatever they need from whomever they think is appropriate, even the British Business Bank to make an improvement to their business. We do that for home loans and even to those who find themselves a bit short before payday. A standardised business plan can set out the business' needs and an assessment of the proposed capital payback period based on the expected return on investment can trigger a risk calculation and interest rate. Offer a lower rate of interest for the kind of businesses we want to grow (an industrial strategy in a paragraph), for example biotech. electric vehicle and AI companies and a higher one for industries that we don't think we need more of e.g. coal mining. Easy. Businesses can now do all the training, consultancy, new plant, new staff or marketing strategy they need to grow and there are lots of service providers to persuade them rather than the 'Nanny State' making decisions for them.

We can close down all business support that is taxpayer and let the market do the rest. Let the City collateralize the new debt and play with it on the money market so that any risks are mitigated.

Oh, and maybe one more thing: make it mandatory that when a business is created that at least one Director has a suitable management qualification.

Kevin Wilford

Experienced Employment Lawyer and Consultant - Proactive, Professional and Committed.

6 年

Wow Paul, what an article, which I've only just seen and read!? Pithy, truthful and very, very relevant!?? Personally, I don't have that much understanding of "City 'collateralization' of debt" but the core of your article seems spot-on!! In your article, you say, "This is essentially our problem. We don't have a cross party, long term, properly funded programme for business support the same way we don't have it for infrastructure (roads, rail, aviation, ports and broadband). Vital ingredients in the life cycle of small and medium sized businesses are overlooked in favour of the chance to get a picture in the media with a hard hat and a shovel announcing some foreign owned corporation building a warehouse on some recently rescued brownfield."? And I totally agree, but just add to that list the same lack of?cross-party, long-term, properly-funded, structured programmes for education/training, healthcare/the NHS, job-creation, housing, local authorities, the police/firefighters/prisons/military et al and we have quite a list!? And I'm not even a socialist! Oh but I forgot, I am am sitting in the heart of the 'Northern Powerhouse' so I shouldn't complain! Roll on tomorrow, I guess!

Paul Coxhead

An entrepreneur who is passionate about linking businesses and networking with local communities and individuals

6 年

Hi Paul, I can't believe I missed this when you wrote it. ?You are completely right. ?We have built PLANit Global over the last 3-4 years and have not had assistance from anywhere. ?I have sold 2 of my houses and basically invested everything I have into the business. ?Now that we are at the point of full commercialisation, we want to borrow money to do this element... but shock, horror... there is no money there because we do not turn over enough! (no s*!t Sherlock, we have poured our money in to R&D and done the risk element of the business and funded it personally). ?We now want to grow and would rather borrow the money because we don't want to give up equity in the business, but there is no money for that!?! ?Begs the question what is the Midlands Engine money for???? I am always astonished that companies such as Carillion get given handouts to support their astronomic toxic debts just to keep them going and business owners (real people, not faceless boards) can't get anything!?!? The point with entrepreneurs is that we will survive and find a way because that is what we do. ?In our case, we are re-locating our R&D and IP to the Isle of Man because they actually do want high growth tech businesses on the island and are prepared to put their money where their mouth is. ?I think it is a shame because we grew this from the Black Country (the heartland of the industrial revolution) and we were hoping to make it a global success from here, but there is just not the appetite amongst Finance Houses and Government representatives. If we don't get this sorted then we will never survive and thrive post Brexit. But unfortunately I don't think there is the passion here to make it happen and we are led by the same faceless corporate influencers who frankly have no 'skin in the game' themselves. If something goes wrong at their organisations, they just move on... no harm no fowl! ?If a small businessman fails we lose everything. ? It is not qualifications for entrepreneurs we need; it is accountability for the actions of the boards of the quangos and people holding the purse strings! Moan over, speak soon Paul Coxhead

RICHARD GRIMES ?

MANAGING DIRECTOR GRIMES FINISHINGS FIS Board Director

6 年

Paul Too many of those ‘Entrepreneurial ministers’ are career politicians with absolutely no business acumen or business history whatsoever, just a title. I believe a country is like a business and should be run as such, by expert businessmen and women with outstanding track records. You’re spot on with regard to a long term cross party approach, as I’ve consulted with ministers on a number of subjects and all too often with the same minister again on completely different subjects as their job titles have changed. Entrepreneurs are often people with a passion and drive to succeed and in many cases, the thought of having to have a business qualification might hamper their creativity? Good, sound and basic business advice, from an expert is indeed a must have though and these new business leaders should be strongly encouraged to avail of these services. Great article..

Egan O'Callaghan

"Empowering entrepreneurs with personalized guidance for successful business start-up and growth."

6 年

Good observation as ever Paul. We are raising funding for a number of projects for clients in the UK and overseas. Let me know if any companies would like to discuss funding?

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