Should Government do more for SMEs?
John Sollars of Stinkyink.com asks: Should Government do more for SMEs?
Reading a recent post on is4profit, EU to Stage European SME Assembly, I sat and wondered what the UK’s Government could do for small and medium enterprises (SMEs).
According to the news story, delegates at the European SME Assembly will be addressing some of the most critical issues facing small businesses today, including:
- Access to business finance
- Access to markets, both in Europe and international
- Encouraging new entrepreneurs, particularly women and youth
- Better business regulation
- Green economic opportunities and
- Growth opportunities in the economic downturn.
So here’s my views on these topics:
1. Access to business finance
This year has already seen two Government finance initiatives to help British businesses grow by providing access to cheaper finance.
In March we got the National Loan Guarantee Scheme that guaranteed £20 billion worth of loans, but only 16,000 loans were applied for, equaling a total of £2.5 billion. #Fail.
1st August saw its replacement launch, the Funding for Lending Scheme (FLS). £80 billion is available and for every £1 of additional lending made by a bank, it will be able to access an extra £1 of cheap funding from the FLS. Any banks that reduce their lending will have to pay higher fees to use the scheme.
2. Access to markets, both in Europe and international
When Britain joined the European Economic Union back in the 70s the intention was to make international trade (certainly within Europe) easier. The advent of the Euro has certainly improved access into European markets, but what extra measures the Government, or even EU, can take is debatable.
3. Encouraging new entrepreneurs, particularly women and youth
During the last four years of recession in the UK over 500,000 new business have been started. (Source: QlikTech and its Discovering UK Growth app). Is our focus wrong, do we really need to be encouraging yet more new entrepreneurs, or rather give more help to companies that are at the critical three year tipping point when most fail?
4. Better business regulation
By better business regulation, I think that should be less business regulation. I’d like to see the Queen’s speech at the opening of Parliament listing the repeal of two old laws for every new one introduced. Haven’t we heard ‘bonfire of red tape’ from every hue of government, but have any of us warmed our hands on the flames?
5. Green economic opportunities
When the economy is buoyant it is easy to declare a ‘green’ agenda. However, Darwin’s ‘survival of the fittest’ applies equally to business as it does to eugenics and for me, greening the way I operate when the economy is tight has to be subsumed to the need to survive.
6. Growth opportunities in the economic downturn
Government, by its very nature spends money that other people generate, and it relies on business to create that wealth. We, the SMEs of Europe are the wealth generators, and Government at every level, from local, through national and up to European, should be focussed on supporting businesses in a coordinated manner. To me it’s important that different government departments, with their different agendas, are able to collaborate in all areas that affect small business.
What can our Government do for business? It can make employing people easier, less costly and less litigious. It can create a level playing field where opportunities to supply Government itself are available. It can downsize and cost the taxpayers of the country less. It can ensure that borrowing rates are at an acceptable level. I guess it can initiate big infrastructure projects to soak up some spare capacity, but this all comes at a cost and the cost is borne by the taxpayers of the country and especially the unpaid tax collectors that we businesses are.
So, please excuse my cynicism when the EU declare that it wants to help SMEs. Before it can do that, it needs to adjust its thinking. The requirements of my internet business are very different from my neighbour who is a wholesale butcher. Therefore step one would be to understand that SMEs are not one amorphous mass, but a bunch of individuals with different needs and different attitudes – that would be a really good starting point.