Tag Archives: Start-up Britain

Start up Britain? How, with no fuel?

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Yet again we hear that the banks aren’t lending to small businesses. Of the £19bn a quarter that’s been pledged to help fuel SMEs, just £16.8bn has been given out – a shortfall of 12%. So, not only is the so-called Project Merlin not working its magic, but this reticence to lend to SMEs is stalling the engines of the very businesses that drive our economy.

This is totally at odds with the entrepreneurial vision of Start-Up Britain that David Cameron set out for us. For me, the rousing rhetoric has been left stumbling at the starting blocks, and reveals the growing gulf between the will (to start and run a successful a business) and the way (having the means to do so).

The banks aren’t willing to lend. The venture capitalists have become more risk averse and won’t finance SMEs unless they fulfill a number of criteria – namely, that they must be in revenue, show profit and have healthy order books.

Which makes it even tougher for early-stage start-up businesses, whether they’re trying to get spin-out from universities, or whether they’re pre-revenue companies with a great idea or a fabulous product but no capital to fund the prototype and testing stage. What are they supposed to do?

Money is the fuel the engine needs to get started. Banks and VCs are the ignition keys necessary to start the engine. But the banks aren’t lending to provide the fuel, and the VCs are taking no risk. So tell me, Mr Cameron, how the hell do you start the engine to start up Britain?

Why Startup Britain should embrace social enterprise too

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When the Government trumpets its latest initiative to boost small business, it normally elicits a cynical, slow handclap rather than an enthusiastic round of applause from me. I always wonder if and how they’re going to put their money where their mouth is – and how will the powers that be help these small businesses a) find the support to get off the ground, and b) secure funding to bolster their subsequent growth. It’s a stark fact of entrepreneurial life that four out of five start-ups fail.

However, I’m starting to think that entrepreneur-backed Startup Britain – which on the surface looked to big on rhetoric but low on funds ­– is offering more inspiration and support than I initially believed.

While it’s not offering handouts to get up and running, in my view, an initiative that kick-starts an entrepreneurial, get-up-and-go culture and attitude in this country has to be a good thing.

The fact the Government is asking small businesses to respond to its call for an ‘enterprise-led’ recovery – and higher education institutions have been asked to create new ‘enterprise societies’– makes me feel that it could be a noble cause. And it’s one to which I am personally responding.

You see, not all start-ups have to be profit making: I think Startup Britain can prompt a while raft of not-for-profit ideas and social enterprise initiatives that can help harness the entrepreneurial spirit that the Government is attempting to inspire, and help build some pride and some direction in the communities in which we live and work.

I’ll be announcing my new initiative in the next few weeks – and you can email me on jon.treanor@conduitpartners.co.uk if you’d like to know more.

For now, let’s just say that I’ll be helping to put the social enterprise into the enterprise-led recovery.

The five ways I would fix Britain for SMEs

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Former CBI chief Lord Digby Jones has set out his solution to making UK PLC fit for purpose in his new book Fixing Britain: The Business of Reshaping Our Nation. He recommends promoting the value of business rather than denigrating it; putting education and training centre stage; and a belief in socially inclusive wealth creation.

He talks common sense, and I can’t say I disagree with any of those principles. But what I think we really need is a pragmatic approach to helping small businesses – which the government so often refers to as ‘the lifeblood of the economy’ – profit and prosper.

So, here’s my five-point plan for fixing small-business Britain:

1. Give easy access to money: I’m seeing some positive moves to ease the financial pressures on SMEs: the latest Budget has doubled Entrepreneur’s Relief to £10m, and mileage allowance has risen to 45p, for example. However, my concern is that it’s never made clear how small businesses can get access to money that’s supposedly available to them – and the process should be made far easier. The likes of Startup Britain make good headlines, but what do they really mean, in practical terms, to a struggling small-business owner?

2. Introduce a VAT holiday: Give small businesses a break from VAT – or at least raise the threshold so turnover has to be much higher before they have to start paying VAT. It is an additional bite into already thin margins. VAT is an administrative nightmare for small businesses, which I believe are being used as unwilling tax collectors for the government. Plus, huge VAT bills are the biggest squeeze on cash flow – the beating heart of any business – and one of the main reasons businesses go under.

3. Stop the brain drain: We have some of the best intellectual property (IP) in the world, but all too often the US seduces it away. In my opinion – and with hundreds of IP commercialisation projects behind me – I think that correctly exploited IP generated in this country is the key to UK prosperity.

4. Get real, and get a plan: SMEs need support in assessing their commercial potential and reviewing which channels offer the greatest profit and return. They need a strategic vision and a tactical implementation plan, because they won’t survive without it

5. Don’t let politicians and civil servants ruin everything: I agree with Lord Jones that government intrusion has made running a business extremely tough – and the very people who intrude on business are those who have very little, if any, experience of life at the coalface. I wrote to Mark Prisk, minister of state for business and enterprise, offering some input and insight from my experience working with 500 SMEs. His lack of interest in following up on my offer makes me wonder where his true priorities lie.

In short, we need less rhetoric and more practical support to get entrepreneurial Britain back on its feet and into its stride.