Government Support for Small Businesses
It is a matter of extensive and longstanding record that the UK’s six million small businesses employ 50% of the workforce yet contribute only 33% of GDP.
They have a high failure rate with 250,000 closures every year, much of it attributed to lack of business skills and systems.
Governments down the decades have promoted numerous initiatives to counteract this, the most powerful of which were the resource-rich investment programmes 1987-2012 led by the semi-private Training and Enterprise Councils and Business Link network which provided subsidised training and advice to one million small businesses. These provided frameworks of tested interventions and consultant credentials checks, imposing operating standards for client project work.
In this period UK small business international competitiveness rose from 21st to 7th place.
But these networks gradually crumbled through intense political lobbying and interference by the educational sector and other public institutions objecting to the involvement of the private sector. The result was that each (of 200) branch was saddled with up to 17 compliance audits annually, consuming most of the resources intended to help small businesses.
Coinciding with the Great Crash, the Treasury concluded rightly that the money was mostly wasted and closed down both networks.
But every subsequent government felt the need for a public show of small business support and introduced important-sounding initiatives whilst spending a fraction of what it took to raise small business international competitiveness in the Nineties and Noughties.
Their strategies were/are informed by the big consulting practices and business schools, who know nothing of small business practicalities and a few high profile ‘entrepreneurs’ to lend small business authenticity.
Today, there are Local Enterprise Partnerships and Growth Hubs, all operating on shoestring budgets, running events at which small businesses meet self-employed consultants who charge commercial rates (eg £500 per day) for further help. These are supplemented by numerous private events organised by individual consultants, banks, FSB, Chambers which follow the same pattern.
Then there are the complex innovation grants and loans schemes, going to small numbers of businesses in specific areas of the economy. Much of their funding is consumed by a public / private consultant industry that charges for writing the bids and diverts much of the money to itself in return for ‘coaching’ and ‘project managing’ the successful end user businesses as a condition.
The 95% of small businesses that don’t attend any such events, or seek scarce grants, spend an average of £2500 annually on independent consultants and trainers with an unknown return. They do so speculatively to solve short-term problems at minimum time and cost, rarely investing in the skills to do things permanently better.
The UK consultancy industry, such as it is, requires no formal qualifications, no professional institutes, no ethics code and is open to anyone who cares to describe themselves as mentor, coach, consultant, trainer.
So small businesses are at a serious disadvantage in finding affordable and trustworthy help.
Since 2012, UK small businesses have now declined to 10th place for international competitiveness, unsurprisingly.
COVID aside, and Brexit for sure, UK must get the top of the rankings without breaking these businesses’ own and the public, bank.
The restorative issues to resolve within small businesses are:
Inadequate business management knowledge
Inefficient working practices
Lack of competent and affordable outside assistance in rectifying these
And…
Lack of public / government knowledge of what small businesses need
A Government national strategy, to be effective would have to involve:
Collecting data on the operating performance of every small business
Evaluating the results by specific skill shortage as indicated by their scores for:
Marketing
Product / service quality
Technology / systems use
People productivity
Profitability / ROI
Organising the results by industry group
Organising the results by postcode
Identifying targeted support needs
Developing practical skills training for each of the 5 business streams
Developing a project delivery and monitoring process
Securing localised sources of competent / trusted training and support
Online assessment and solution tools
Coached practical learning
Costing much less than all the present initiatives
Raising performance and survival
Making it worthwhile and simple for small businesses to collaborate
And above all, affordable to sole traders, so they sustain support forever
The above proposition, to which Runagood® has the solution, has been passed around 11 government departments and to those to whom they turn for advice.
Here’s what happened:
Government:
“Thank you for your proposal, regrettably it doesn’t fit our current strategy”.
Accountant institutes:
“Actually no, we are already developing our own solution”
Business trade bodies:
“No, sorry we’ve tried selling business consultancy and members didn’t want it”
Employer bodies:
“No, it’s not the sort of thing we do”
Big 10 accountancy / consultancy practices:
“We don’t touch any business below £10m turnover”
Business software suppliers:
“Only if it’s ‘no touch’ i.e., client uses it without any human interface”
So where does that leave a national small business improvement strategy?
"Speak softly and carry a big stick; you will go far." (Theodore Roosevelt)
Speaking softly?
We will continue appointing accountants who wish to diversify into business advisory work, and train them to use affordable technology with their clients. They are trusted professionals who are good at learning, understand small businesses and competent with technology. They are gradually winning new revenue from existing clients and new clients for business and accountancy consultancy.
In the future all business advice will work this way.
Big stick?
Smart technology that:
Assesses any business’s performance
Forecasts its potential
Identifies its weaknesses
Delivers affordable solutions
Sustains support forever
Raises UK small business competitiveness to #1 worldwide
Which means that we will in the next two years achieve a tipping point of enough partners helping enough clients when suddenly this will emerge as the new future.
And you could join it now while it’s still easy and affordable to do so.
By Duncan Collins
Founder of Runagod.com Ltd