Large companies have long tried to foster enterprise through support for small businesses. But their success rates and their needs vary, so deciding how best to help requires careful thought.
All public limited companies and their large private subsidiaries will soon be required by law to publish how long its takes them on average to pay their bills. The aim is to help small firms suffering late payment and extends the current requirement simply to publish the company policy. The draft regulations, issued by the government on January 24, are expected to receive Parliamentary approval before the end of March, so affecting annual reports published after March 1998. Contact DTI Enquiries on 0171 215 5000
Recent growth in the numbers of small firms is largely due to increasing self-employment, so small businesses are unlikely to be the main source of future jobs, says the TUC in a report, The Small Firms Myths, published on January 9. The increase in the number of small enterprises by 1.3 million since 1979 came mainly from zero-employee micro businesses, with the number of firms with employees largely unchanged. However the TUC says the small firms sector is important, with firms up to 50 employees accounting for 9.7 million employees and 28% of turnover. The TUC is currently campaigning against changes proposed in employment protection rights. Contact Stephanie Power, TUC, on 0171 467 1310
NETWORK SUPPORT NEEDED
Only a handful of the UK’s small and medium sized enterprises achieve consistent growth in employment, with barely more than half of newly-registered VAT firms surviving longer than three years. In a report published on December 18, the Employment Policy Institute says that those with product or process innovation succeed best. So enterprise services should concentrate on creating collaborative networks to help innovative companies, rather than simply encouraging more micro start-ups. Contact Employment Policy Institute on 0171 735 0777
Small businesses in Britain are more optimistic about their growth prospects than their counterparts in other European countries. The fifth annual European Business Survey was conducted among 5,000 owner/manager companies in 19 countries by accountants, Grant Thornton, and published on January 9. Expectations on sales, employment, profit, investment and training were examined, revealing most pessimism in France and Germany. Contact James Murray, Grant Thornton, on 0171 728 2762
TARGETING LINK FUNDING
The government’s ?73 million budget for the Business Link network of small firm support services will be tied to performance measures, the small business minister, Richard Page MP, announced on January 17. Business Links will need to earn a quarter of their income from charges within five years, and meanwhile performance on take-up of services, particularly from fee-paying firms with 10-200 staff, will be used to target funding. There are now 87 Business Link partnerships covering most of England and Wales. Contact DTI Enquiries on 0171 215 5000
SMALL BUSINESS ON-LINE
Small firms are missing out on the benefits of new information technologies partly because large supplying firms do not target their needs and government initiatives are focussed on big companies. In addition small firms themselves do not understand the full potential. The findings come in a report, Small Firms On-Line (ISBN 1 86030 043 X, ?5.50), published on January 6 as part of the Commission on Public Policy and British Business, run by the IPPR. Regional electronic trading networks and partnerships of business, local authorities and chambers of commerce would help overcome this, as would greater interaction between higher education and small firms. Contact Rosaleen Hughes, IPPR, on 0171 470 6100
A European Commission initiative, supported by industry, to help unemployed entrepreneurs set up businesses on the Internet was formally launched on December 13 at a conference held at the BT Centre, London. Organised by LEntA and University College London and attended by small business minister, Richard Page MP, the conference heard how the first 25 people are undergoing a free 16-week training course. EVENT is part of the European social fund ADAPT initiative and is supported by two TECs along with Midland Bank, BT and Microsoft. Contact Mary Creagh, LEntA, on 0171 236 3000
Young owner managers supported by LiveWIRE want better funding support, more advice for business start-ups and help with training. A survey among 150 small and medium sized enterprises on attitudes to the forthcoming general election also found more than half supporting a minimum wage. In December LiveWIRE, which is supported by Shell UK, launched its 1997 Business Start Up Awards, with ?200,000 on offer in prizes and free advice to the 16-25 year olds who submit business plans. Since 1982, LiveWIRE has helped 70,000 young people considering starting a business. Contact Brian Butcher, LiveWIRE, on 0191 261 5584
Fashion is a funny thing. Not so long ago, enterprise was everything – turning unemployed steel workers into budding businessmen. Then the backlash came – not one-man-band businesses but SMEs employing more 10 people were to be Britain’s answer to Germany’s Mittelstand. Enterprise agencies out, Business Links in. The recent studies quoted above are part of that backlash.
Surely it should not be a question of either one or the other? Britain’s much discussed long tail of under-performing companies includes micro, small and medium sized firms. The 3.4 million micro businesses and 800,000 firms employing between one and nine staff can hardly be left to go to the wall. If half don’t survive beyond three years, that is an argument for more support, not less.
Of course large companies, just as much as government, only have to make choices in devoting limited resources to the enterprise agenda. But we need a both/and, not either/or, strategy. Community affairs departments should concentrate their help at the enterprise agency end of the market, self-employed start-ups and small firms. There the benefit to the company is less immediate, the cause more altruistic. In contrast the mainstream business should take responsibility for medium-sized enterprises – forming partnerships for sourcing of supplies, offering long term research contracts, participating in regional IT networks, and making sure their special needs as customers are met. Careful targeting of support can therefore ensure the full range are helped.
Corporate Citizenship Briefing, issue no: 32 – February, 1997