roundtable: funding for SMEs 39
businesses of any UK region – most small but leading edge SMEs.
Are banks moving with the times?
Murray asked: ”Have banks moved on from just supporting ’bricks and mortar’ businesses. Are they now embracing online enterprises and new business models?”
Fuller: ”Undoubtedly, that’s the way it has to go. At the outset banking was very much loan to value but it needs to move on to new business models. Banking has to get away from a formulaic process and into the relationship side, getting back to basics with an understanding of different businesses.
Donaldson: ”Serviceability is key – you only have to ask three questions: one, can you afford it? two, can you afford it? three, can you afford it?”
Cole: ”Things are definitely changing. Invoice financing, for example, has been growing year on year and is a buoyant market that will grow even further when the economy starts growing. It’s a product that provides cash and cash is a key to business nowadays.
”People have said invoice financing is and expensive way of getting cash and others see it as ’last resort funding’. I have to tell you that both are urban myths. Invoice financing is now a very competitive model for funding.”
Fuller suggested the UK banks might move more towards American financing models, structuring lending against the different assets in a company’s balance sheet.
Do people want to work?
Murray asked about staffing difficulties for SMEs.
Winfield said Haskins had already received 1,000 job applications via Jobcentre for its new Roundstone site due to open next spring, without even advertising yet.
Denyer echoed that keenness to apply (”We had 100 applications for one job”) but warned that after selecting six interviewees, only one turned up.
Haley reported the same problem. ”We had to report back to the Jobcentre that out of our 10 interviewees only two turned up.”
Fuller pointed out the quality over quantity concern: it was actually difficult to get the right calibre of applicant.
Winfield agreed. ”Kids today may be IT-literate but their aspirations are not to work in shops. When I was 18 I knew horticulture was going to be my career, but I haven’t met anybody at 18 wanting to go into horticulture for many years. They perceive garden centres as welly-boots and plants. There are lots of other sexier things to do that are probably better paid. They have higher expectations and that’s our problem, but we do get people when they know it is a nice place to work.”
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2011
Cole suggested there was a need to enhance and build apprenticeship training, perhaps through tax incentives. ”Manufacturing may be big in the southeast but we need to get people into these businesses to bring their skills on, and training takes time. culture we are fighting against.”
It’s a now
How could the Government support SMEs more?
Heathcock: ”Everybody has a wish-list but it depends what is achievable in political and economic terms.”
Vaughan called for a simplification and parity of taxation on SMEs. ”Corporation Tax is a disproportionate burden for SMEs. It was recently reported that many FTSE companies pay their chief executives more than they pay in corporation tax, whereas the minute an SME makes a profit it gets hit by 21% CT. It appears that the bigger you become there are mechanisms by which CT can become adjusted.”
Tax accountant McKeown mentioned that the government’s office of tax simplification (”That’s an oxymoron!” quipped Vaughan) seemed to be taking a long time in reducing the tax burden on SMEs. ”There is so much they could do, not just with CT, but with VAT, PAYE and so on with regard to cutting down red-tape.”
Denyer agreed that red-tape was an SME problem, with VAT a particular concern for Chewbz in its future planning.
”It may go
up again this year. Do we pass it on to the consumer in retail pricing or do we take the hit?”
Winfield: ”We always pass it on – you can always put your prices down if you get it wrong.”
Vaughan and Winfield both suggested the Government should look at reducing SMEs rising energy costs. ”Let’s not crucify businesses on their energy costs for no benefit,” said Vaughan, arguing that the expense and inefficiency of the government’s current policy on renewable wind energy was likely to impact SMEs and UK economic recovery.
”Wind is an extremely expensive and inefficient energy source. We are talking about hundreds of millions going into those sectors for hardly any benefit.
If you are
lucky you get 25% of the installed capacity actually produced as electricity. Wind does not blow all the time so you also have to build conventional power stations to supplement production.
”The only reason the windfarms are being built is because we have signed a piece of paper with the EU saying we will generate a certain capacity from renewables. And every penny of that could have been going into researching truly viable alternatives.”
David Murray
Other suggestions to the Government included:
Further reworking of the £2.5 billion Business Growth Fund so that it is actually targeted at the SMEs who need it. Currently it appears to be targeted at the wrong markets (£10m – £100m turnover) and available on less than favourable terms. (The BGF chief executive Stephen Welton has been reported as saying that the BGF turnover limits are not rigid and he expects the fund’s ’core market’ to be businesses with sales of between £5m and £50m.)
Easing the strictures of the EU Working Time Directive (EWTD) to allow a company more freedom to grow. With the country trying to grow out of recession it was the wrong time to enforce the EWTD (and many other EU regulations).
Details:
www.santander.co.uk www.businessmag.co.uk
Kerry McKeown
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