nurturing small businesses

Is government providing the right support for your business?

Posted by on Feb 17, 2012 in Blog | 0 comments

Politics and small business make an interesting mix, as borne out by observations made on last nights BBC Question Time.

In an amusing discussion involving Justice Minister Ken Clarke MP, Baroness Kramer, Owen Jones (author of ‘Chavs’), John Prescott, and Julie Meyer, Founder of Ariadne Capital, the message regarding businesses is clearly ‘the more money we can get small businesses to borrow, the better the country’s chances of finding economic stability quickly’.

However, even if this is right strategy, the discussion showed it appears to be failing.

Conservative Ken Clarke set out the government’s aims, which mostly focus on helping small businesses to raise money by giving them access to funds through the ‘Enterprise Loan Guarantee Scheme’, and boosting Enterprise Zones.

When asked ‘What would you like to see done’ Lib Dem Baroness Kramer, who supports the coalition, said, “We’re still not getting the funding to small businesses, many of which work in a micro-climate, many of which could employ 1 or 2 more people.  If every business speeded up its growth plans by 3 or 4 months, it would make a big impact.”

‘How would you achieve that? How would you get the money?’ asked host, David Dimbleby.

“Lets take down the barriers and lets get a raft of small banks like you see in the places like Germany….”, said Baroness Kramer.

However, perhaps spending more money on new resources isn’t the answer.

Prescott responded “We’ve given billions to banks and they’ve failed to give the money to small businesses.  That seems the responsibility of government to address.”

Later in the discussion Ken Clarke MP stated: ‘Small businesses, we do have an ‘Enterprise Loan Guarantee Scheme’, guarantees loans to small businesses.  Only yesterday [Wednesday 15th Feb 2012] the limits were raised.  I don’t mind if people haven’t heard of it, because they won’t, you know.  It only appears in the Financial Times, probably.”

So there are currently ways and means of getting money to small businesses, but they’re just not delivering.  If this is because of poor management and poor communication – to which the points made seem to allude – then time and effort put into making the systems work could well be a better, and cheaper, use of money.

Quick note here: If you want to find out more about the ‘Enterprise Loan Guarantee Scheme’ it is actually called the ‘Enterprise Finance Guarantee’.  Using its correct title might help people find out about it!

However, Owen Jones’ comment earlier in the programme, could put a whole different slant on the direction the strategy to support small businesses should take.

“If you don’t have demand in the economy, it doesn’t matter how entrepreneurial people are.  People will not buy their goods and jobs will not be created,’ said Owen.

While having the option to borrow money through the ‘Enterprise Loan Guarantee Scheme’ to refinance existing loans, convert overdrafts into loans, gain or extend an overdraft and cover cash flow shortages, may be a real bonus to, and make lives easier for, some small businesses, it would be interesting to hear a discussion about how much of a solution this is.

Is debt the answer to stimulating the economy?

Creating demand for the services and products small businesses provide and sell is probably a more complex solution.  Could practical help in developing business-to-consumer relationships and building sales develop a stronger, sustainable, economy?

Leave a Reply