17 'There is definitely a growing startup culture in the Thames Valley' BUSINESS SUPPORT: Help for startups and growing SMEs
With the Autumn Statement having abolished Growth Accelerator and Manufacturing Advisory Service support within the national Business Growth Service, Elliott was critical about this possibly “short sighted” cutback in coaching and advice for startups and smaller growing businesses.
“As the economy strengthens we need healthy, well-managed small businesses. They create a significant amount of new jobs, so are critical to the UK's prosperity. Startup businesses are often cutback losers because they are less able to afford support from private-sector providers.” LEPs and other agencies will have to continue to work together effectively to deliver as much help as possible locally through the Berkshire Business Growth Hub, set up two years ago for those businesses having most impact on economic growth and job creation, she added.
Bloxham agreed: “There is definitely a growing startup culture in the Thames Valley, as evidenced by Connect TVT and high-growth emerging companies, but I feel there has been a decrease in startup business investment locally and I don’t think that’s right.” Previous cutbacks had not been offset by private initiatives, or LEP and Chamber of Commerce support activities, he added.
However, he accepted the Government had to limit expenditure. “The situation is not great. What else can it do? Everyone has to take some austerity pain.”
Jon Stradling highlighted the thriving regional SME sector* and pointed out that funding was not an issue within HSBC, which in May launched a £150 million SME fund across Thames Valley and north Hampshire as part of the bank’s £8 billion national fund support for small and medium-sized businesses. “We want to lend more money to businesses, and our net lending to SMEs in the 2015 first-half was already up 5% on the prior year. Last year, we approved over 85% of business lending applications.”
HSBC had also assisted startups and SMES through its Strategies for Growth interactive workshops, advisory seminars and online business planning tools.
Banks were not always the right funding solution for startups, Milne and Brookes both noted. “Therefore, it seems slightly unfair that UK banks are regularly criticised for not supporting startups,” said Milne.
Accepting that business multi-funding was becoming more prevalent, Stradling explained: “Today’s companies often explore various funding options. That’s not because of a lack of bank liquidity, but simply because companies want to optimise capital structures within their overall corporate strategies. Certain kinds of funding are more appropriate depending on the business, its size and its lifecycle.”
Bloxham agreed: “There are a lot of people out there – VCs, equity firms, banks – willing to help startups and SMEs.”
“There is significant investment capital available but it is predominantly targeted at growth and development of existing and proven businesses or buy-out transactions,” noted Milne. There was still a funding gap for startups, who were often loathe to consider equity investment alternatives, so fell back on personal borrowings or family and friends funding. A new government initiative, exclusively targeting startup funding, would be a useful market addition.
Brookes felt help overall needed to be better publicised. He exampled tax- efficient EIS and seed funding investment schemes – “I am always amazed how few people know about them”. The development of more regional growth hubs should also be encouraged, with a Thames Valley specialist hub focused on IT technology.
“Starting a business is tough, but the most important factor is a positive growing economy as this creates opportunity,” added Kavanagh.
*From HSBC research, 20% of SMEs expect to grow their revenues by 6% or more in 2016 – 2-3 times the forecast UK GDP growth.
Austerity is not yet over was the panel consensus AUTUMN STATEMENT: Opinions, pros and cons
Our panel rated it 3-7 out of 10, an “anti-climax”, “nothing ground-breaking”, and “just tinkering with the current budget.”
Austerity is not yet over was the panel consensus, although the focus had changed towards “a more balanced ‘value for money’ approach to public spending and the removal of unnecessary expenditure,” as Milne put it.
Brookes summed up: “Things are improving but a few good economic figures do not confirm the sustained growth that the nation needs. We need to stay prudent but positive, cautious but confident – keep to the plan, that is.”
Welcome Statement announcements were:
• The devolution of asset sales, business rates and other tax powers to local authorities – for effective use to boost the region. “On a nationwide basis I think people want to see money raised locally reinvested locally,” commented Kavanagh.
• The proposed 50% increase to £61b of the Department of Transport capital spend budget – “as long as we get our share”.
• The continuation of business rate relief – an important cost saving for smaller businesses.
• No change to IR35 tax legislation for contracted professionals and specialist freelancers – key flexible labour to counter Thames Valley skill shortages.
Unwelcome was:
• The Apprenticeship Levy, particularly for larger companies.
Introduction of personal digital tax accounts by HMRC could reduce bureaucracy and tax avoidance in the long-term, but significant short-term ‘teething problems’ are likely.
Cutting working tax credits was broadly seen as a mistimed policy that should have been phased in with Living Wage increases. Scrapping the cuts appeared to be largely based on political not economic factors.
THE BUSINESS MAGAZINE – THAMES VALLEY – FEBRUARY 2016
The next Taking the Temperature review will appear in the May edition ...
www.businessmag.co.uk
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