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Business Development & Marketing Finance General

Should SMEs use traditional marketing?

traditional advertisingThe benefits of using online marketing through social media, blogs, websites and the rest have been well-covered in other blogs.
Traditional marketing, on the other hand, is deemed to be costlier in terms of printing and distributing the materials for a newsletter or magazine, brochures, leaflet drops, press and trade publication advertising (plus the cost of buying the space). The cost of content ought to be similar although it has been dumbed down with everyone now producing their own.
While billboards are plainly too costly for SMEs, press activities/PR need not necessarily cost a great deal. Imaginative ideas such as submitting news about activities or functions that include a reference to a celebrity, or a well known organisation or charity may be enough to catch the news editor’s eye. A great photograph with minimal text is the easiest way however for an SME to get press coverage.
Or what about the well-known Pizza company that hires a person to stand or walk along a street wearing a superhero costume with a sign or a sandwich board?

Comparing the costs

Online marketing is often free to post on your own website or on LinkedIn. Reaching the right followers however is key and costs escalate when posting on a platform that has a well-defined audience. Online does arguably level the playing field by making it easier for the smallest SME to compete alongside its larger rivals.
Results of online marketing are measurable in as much detail as the business would like, creating greater understanding of customers’ behaviour, needs and allowing for precise targeting. This is where successful companies spend more time and money on analysing what does and doesn’t work. SMEs can also do this but all too often don’t value the investment.
Since time is money, and it takes quite a long time to learn about the marketing and associated analytical tools, it makes sense to use an experienced marketing specialist, part time if necessary. Whether employed or outsourced, an expert can run the marketing campaigns, monitor them, analyse them and provide reports based on data. The reports are key to improving the results which is achieved by constantly adjusting the marketing campaigns to achieve better results. Again this is what the successful companies do.
If a business economises by having someone do this in-house as well as their main role, how much does it cost to have them constantly juggling tasks when they might be more productive focusing on their main role?
It is also said that online marketing enables a business to create relationships with customers, raise awareness of its brand and demonstrate its knowledge, especially in an era of short attention spans and browsing via mobile phone. If online marketing is done in-house how much time can you afford to let the employee spend on monitoring and responding to responses? What about the costs or rectifying an unfortunate piece of online marketing that goes wrong and could damage the business’ reputation?
While traditional marketing costs for printing and distributing materials may be higher at the outset arguably their potential longevity is far greater than the unopened or swiftly deleted message on a screen. This is not only because the material can be re-used, with tweaks, repeatedly but also because there is some scientific evidence that people like to have something they can touch and keep. At least they have to physically handle hard copy materials.
Research done in Canada on the benefits of traditional marketing, by testing eye tracking and measuring EEG brain waves, attention spans and ease of understanding has also found that the hard copy scored far higher for ease of understanding and brand recall.
While there is a wealth of analytics data for measuring online marketing, it is argued to be less easy to target and to measure results for traditional marketing. But is that really true?  Run a simple postcard campaign with a tempting offer for replies and include a code or codes in the return address or even a dedicated phone line and it is easy to track the origins of the responses and compare the results with the previously-defined percentage return for the campaign.
There is no doubt that there is some value to businesses from using traditional marketing, but do they have to choose between this and online marketing?
It may not be a case of either/or but identifying the right mix of online and traditional for an individual business after carefully weighing up the costs in relation to its available marketing budget.

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Business Development & Marketing Cash Flow & Forecasting Finance General

Corporate Social Responsibility can boost your business

Corporate Social Responsibility and profitabilityThere are numerous definitions of Corporate Social Responsibility (CSR) and increasingly it is something that businesses from SMEs to large corporates cannot afford to ignore.
Generally, CSR is seen as something that will benefit a business’ reputation if it has clear policies about its efforts to reduce its impact on the environment, to contribute to the local community where it operates, to do its bit for charity and to have an ethical employment policy.
The CSR emphasis tends to be on “green” and charitable initiatives, but it is obviously not enough to set up policies, it should also act on them and publish its results. Essentially CSR is about doing business in a way that is sustainable for itself, the community and the wider environment.

How far should a business go and can CSR improve profitability?

There is an argument that encouraging every single employee to participate in a business CSR can also have an impact on their behaviour outside of the work place.  If, for example, the business makes every effort to minimise packaging and to recycle everything it can and makes it easy by placing recycling bins where employees can easily use them, the argument is that they will consider using the same practices at home.
Similarly, challenging suppliers to operate in a sustainable way will reinforce sustainable activities not only for them but also for the business that is using them. This is where SMEs often need a CSR Policy since larger clients often require their suppliers to have one.
The effects on profitability may be harder to quantify, but as customers become more selective and concerned about the ethics of the businesses from which they buy, there is likely to be an advantage to the business in terms of a better reputation and increases in orders and sales. Indeed not having a CSR policy may be a bar to becoming a supplier to some corporate clients.
At the moment, businesses are operating in a very uncertain economic world thanks to the decision of the UK to leave the EU, the time negotiations are expected to take and the volatility of £Sterling which is affecting both import and export prices.
Signs of a more protectionist and anti-global mood in the US and some European countries are also making business conditions more difficult.
So, anything that can help a business to reduce its costs is likely to be welcome and therefore CSR environmental initiatives, such as reducing waste and excess packaging, switching to energy-efficient forms of heating, or switching to more fuel-efficient delivery routes can also have an impact on reducing business overheads and improving both efficiency and profitability.
CSR is more than simply an exercise in improving business reputation.  It can have real, tangible benefits.
One of the three themes in the Government’s Green Paper on corporate governance is to investigate ways of strengthening the voices of employees, customers and suppliers at board level. The consultation period for this ends on 17th February.
Depending on the measures subsequently introduced on this it is possible that a company’s commitment to CSR may become even more important.

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Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Do your employees need to be certified by professional trade associations?

Many small businesses offer services and skills that require individuals to be certified by professional trade associations.
In some sectors membership is a legal requirement, such as the Gas Safe register for Gas Engineers or Part P registered with NICEIC or NAPIT for domestic electricians. In others the professional status can be blurred as neither qualifications nor membership is always necessary, such as corporate finance, estate agency, valuation and accountancy services. Despite this some aspects of these activities are regulated hence the minefield of professional status.
The benefit to small businesses of their individuals having such membership is considerable. It means they can offer reassurance to clients about a level of expertise. Trade bodies also provide support for members such as providing advice, offering continuous professional development (CPD) and regular updates on developments within their specific industry. It can also make recruitment and employee reviews that much easier by reference to the qualification, the qualifying body and maintenance of CPD records.
Where membership is not compulsory a business may find a problem with insuring its activities such that the lack of qualification can result in expensive or useless insurance.
Increasingly sophisticated clients ask for insurance although this is not necessary for those who are regulated as indemnity insurance is a condition of such regulation and underwritten by the professional trade body.
The holding of tenant deposits by letting agents or client money by lawyers are two such areas where clients ought to check they are dealing with a regulated firm.
Please let us have your thoughts on professional trade bodies.

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Banks, Lenders & Investors Business Development & Marketing Finance General Turnaround

How do you stay ahead of your competition?

In the choppy and uncertain economic climate of early 2015, while the outcomes of the UK election, Eurozone QE and the new Greek Government’s efforts to renegotiate its debts are still uncertain, investment in business and consumer spending are likely to remain muted.
Currencies fluctuate, commodity prices, not only oil, yoyo and business margins continue to be squeezed.
In these circumstances what can a small business to develop and grow rather than simply survive?
While it will be necessary to continue to keep a tight control on cash flow and to have a clear marketing strategy, the three main opportunities for growth are improving employee productivity, looking to new markets such as overseas, and innovation to offer a ground-breaking new product or service.
These drivers of growth rely on investment in marketing, equipment and R&D, but your competitors can copy this if they see it working.
Culture, however is more difficult to copy where getting it right is key to implementing change. People really are the greatest asset in a business.
In today’s highly competitive world change is the new normal and standing still is no longer an option.
Investing in people, their training, development and welfare is the best way of achieving growth as they are needed to implement the changes necessary to stay ahead of your competition.

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Business Development & Marketing Finance General Turnaround

There should be clearly defined roles in businesses

Leadership is crucial to keep a business on track and should be the responsibility of the CEO or MD.
Too often, however, the lines become blurred, so that particularly in small businesses the MD becomes embroiled in issues that should be delegated to others.
Similarly, all too often line managers leave HR to do their job of managing employees, especially when it comes to dealing with performance related issues.
What causes this kind of behaviour? Is it an issue of trust, such that the leadership has insufficient confidence in line managers’ abilities to manage staff? Or do line managers lack confidence that they will be supported by their own managers?
This is often about fear. If line managers have insufficient knowledge of the limits and responsibilities of employment protection, and employee rights, or lack confidence in handling negotiation, or that their decisions will be supported, it is very tempting to leave it all to HR.
We would argue that no business can be successful unless it has a clear line of command, with roles and responsibilities clearly set out and a company handbook to guide everyone, managers and staff.
When a business becomes dysfunctional it is important to look at the management behaviour to establish whether the roles and responsibilities have become mixed up, leaving a beleaguered CEO to fire fight when they should be thinking ahead about strategy.

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Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Use the Christmas break to refresh and regroup

Anyone running a small business will know that it is easy to lose sight of the bigger picture in the face of the daily list of “things to do”.
So the seasonal festivities offer a chance to relax and regroup. Taking a break every now and then is important for mental health, as is reconnecting with family and friends who too often have to take second place.
It also provides a chance to reflect on the past year and plan for the next one, setting goals and thinking through how to achieve them.
So we at K2 we would like to wish you all a happy and restful Christmas break and hope that you start the New Year refreshed and ready to lead your business to greater success.

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Banks, Lenders & Investors Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Glass half full?

In an ideal world every small business is planning ahead but needs some clarity and certainty about the future economic environment in which it is likely to be operating.
The reality, however, is more like an exercise in crystal ball gazing.
Business headlines portray a rosy picture of the UK economy back to pre-Great Recession levels of performance which is underpinned by unemployment falling dramatically. It should however be remembered that we are already in the build-up to the next election, now less than a year away.
Other commentators who are not getting the headlines are promoting a level of caution that no one wants to hear. We have had quite enough bad news over the past 6 years and now want some good news.
It may however be unwise to be unaware of the warning from IMF Chief Christine Lagarde, that financial markets may be a little too optimistic, given that recovery is still lagging in Europe, one of the UK’s chief export markets.
It would also appear that not everyone is enjoying a boom if the reports are correct about UK businesses being in arrears with VAT, calculated as having have risen by £100 million to £2.6 billion in 2013, according to business finance provider LDF.
The Bank of England’s Monetary Policy Committee is also concerned about signs of a weakening in growth in the second half of the year, pointing out also that real wage rates have not yet started rising, while inflation is edging up.
We should know that economic forecasting is by no means a precise science, and if we had forgotten 2008 was a big reminder that chancellors of the exchequer cannot ensure there will never be a return to “boom and bust” economics.
Business planning needs to take into account confidence or lack of it. Hope and spin are not much help to the small business deciding whether to seek funds to invest in the future or avoiding taking risks.
So, apart from continuing to keep a close eye on cash flow as a prudent measure, is it time for businesses to plan for growth? And who is going to back them by sharing their risk?

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Banks, Lenders & Investors Finance General Rescue, Restructuring & Recovery Turnaround

What would be on your wish list for banking reform?

A full-scale investigation into whether there is sufficient competition among banks is perhaps a step closer, though not yet a certainty, following the announcement that the CMA is to study and consult further before making a decision in September.
Quite why the CMA (Competition and Marketing Authority) needs further consultation before making the decision is a mystery when its studies so far have led to a provisional conclusion that small businesses and personal account customers have not been receiving a good service from the banks.
There has been enough evidence from the FSB and regularly released figures that small businesses have been finding it increasingly hard to access lending from the banks, that they have been mis-sold products (eg Interest Rate Hedging Products) and that the days of having a relationship with a proper bank manager who knew and understood them are long gone.
So assuming that the CMA does start a full-scale investigation in September, likely to take at least 18 months to complete, as a small business what would you like on your wish list for banking reform?

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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting General Rescue, Restructuring & Recovery Turnaround

How does a small construction business plan in volatile times?

The construction industry is always a volatile sector whatever the economic circumstances but figures released over the last couple of weeks have been particularly so.
One survey (from Markit) showed a surge in house building in June, along with an increase in the number of workers being taken on by building firms.
Just a week later, figures from the ONS (Office of National Statistics) seemed to contradict this with a reduction of output by 1.1% in May and indications of a slowing in growth.
While the months being surveyed do not precisely match, this illustrates the difficulties for those working in the sector as self-employed or sole traders, effectively as micro businesses, who need to plan ahead.
As small businesses, many builders lack the security of future orders which relates to them reporting difficulties with securing finance, problems getting credit for the supply of materials and labour shortages due to their own fluctuating demand.
For all small business, being able to forecast and manage cash flow relies on market research and is an essential part of planning for both stability as well as growth.
The building sector has been characterised by many firms paying for the last job with income from the next job. This cycle clearly catches up with those firms when the next job is delayed or cancelled.
While stressful to be stuck in such a cycle, it can be resolved but needs either an injection of cash, or the assistance of a restructuring specialist. The initial advice is normally free but rarely solicited.

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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting General Insolvency Rescue, Restructuring & Recovery Turnaround

Concern about Start-up support scheme is growing

The Sunday Times has been highlighting issues with the Government’s £150 million Start-up loans scheme, which is administered through the Start-up Loans Company chaired by James Caan, a former Dragons’ Den judge.
Information on the company’s website is minimal unless the user is a potential applicant and goes through the registration process, but using a disclosure of information request the paper has discovered that initially default rates of up to 40% had been expected, but were anticipated to be between 30-35% by the end of the scheme in 2018.
Under the scheme start-ups can borrow up to £25,000 at an APR of 6% which must be repaid over a five-year period. According to both Government and the Loan Co websites these loans are unsecured.
The new businesses also receive mentoring as part of the package, which matches their applications with a “delivery partner” with whom the loan terms have to be agreed.
At the moment around £95 million of the £150 million pot has been lent and of this calculations are that repayments on around a fifth of that money are in arrears, leading to fears that the debts may have to be written off.
Most recently, the paper has discovered, up to 3,000 of the current 18,000 recipients have not been given access to a mentor.
It quotes Mr Caan as saying that mentoring was “encouraged but not compulsory” and that the company did follow up on those recipients who were not using it. He has also said that every effort was made to recover funds.
While, of course, not every new business will be successful, this does raise questions about the anticipated level of failure and the viability of this scheme.
We understand that a criteria for loans under the scheme is the need for a personal guarantee. If this is the case, are we to expect a large number of bankruptcies in the next couple of years? Do get in touch if you have a Start-up Loan under the scheme.

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

How can you as a small business fund the growth of your team?

Zero hours contracts were heralded as a tool that would help businesses to keep their wage bills under control, by only paying employees for the time they spent actually working.
No wonder they were enthusiastically taken up by many large employers and could have been ideal for small growing businesses with tight margins. Regretfully most small businesses do not employ advisers on how to structure such contracts so they are not that common among small businesses who more often use sub-contract or piece-work contracts.
Zero hours contracts have also proven to be a problem because some employers abuse them by using clauses that prevent employees from taking other work even when there was none available with the contractor, leaving the worker with an uncertain income or in some instances no income and certainly no safety net. No wonder unemployment statistics have declined.
Legislation is on the way to change this but it raises the question as to how small businesses can attract and keep the best staff and how they can find the money to pay them a reasonable wage while at the same time developing capacity for a growing business.
It may be that revamped zero hours contracts will be useful to smaller businesses but legislating against the abuses will be difficult. For the moment the preferred option is likely to continue, that of outsourcing work to trusted sub-contractors.
Sub-contractors are often small businesses or sole traders themselves who take pride in their work and have a vested interest in building long-term relationships with clients. Essentially they become part of your team without the cost or obligations of employment.
Collaboration and partnering arrangements offer scope for growing both businesses.
Let us know how you are funding the growth of your team without breaking the bank.

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Banks, Lenders & Investors Business Development & Marketing General Insolvency Rescue, Restructuring & Recovery Turnaround

Gut feelings and fair weather advisers

A piece of research among business leaders carried out by the Economist Intelligence Unit recently found that nine out of 10 would be likely to rely on their gut feeling if presented with data that contradicted their intuition.
In a world that teems with business consultants offering guidance on best practice and must do’s of every shape and colour it can be difficult for the small business owner to know whose advice to trust, when to trust it and when to trust their own instincts.
It makes sense for start-ups and SME owners to take advantage of the wealth of support on offer particularly when they can’t afford to employ experienced executives or if they are looking for investment or finance.  However, it can be more tricky when the situation changes from optimism and doing well to one when plans are not working, or one when the business is running out of cash.
When optimism becomes a harsh reality, one reality is finding out about your advisers, most become unavailable, the more so when they are not being paid and the money is running out.
When as a business owner you are overcome with concern, have sleepless nights and are experiencing anxiety, you need advisers who can deal with reality. When running out of cash you need a business doctor to take a cold, hard look at the situation and at the opportunity so they can discuss your options for survival, for growth, or if necessary for closing down with dignity. The right advisers will have contacts for providing finance as well as having experience to help you deal with the issues that are causing you concern.
Most business owners know when they are being spun a line, when they are hearing what they want to hear but the courageous ones listen to their gut instinct while also employing advisers who will challenge them.

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Banks, Lenders & Investors Cash Flow & Forecasting Factoring, Invoice Discounting & Asset Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

How can smaller businesses fund growth in the economic upturn?

 

A new report by the Credit Management Research Centre and Taulia has revealed that UK companies have been relying heavily on trade credit.

It is also well known that traditional bank lending to SMEs declined by 20% in the last 12 months.

This is despite bank claims that they have plenty of cash to lend and a perception that they are declining loan applications. More realistically the decline in bank lending is down to loan criteria being tightened and the fact that credit worthy companies have been paying down loans instead of funding growth.

So how are small businesses going to fund the expected increase in business and orders that come with economic recovery from recession?

If a company accepts orders without being able to finance them it runs the risk of insolvency through overtrading, which is why so many commentators point out that most insolvencies occur during the upturn after a recession.

Given that many good businesses have used the recession to pay down debt, it can be assumed that their balance sheets have improved and therefore they will be easily able to raise finance for growth from the banks.

However there are a lot of SMEs that do not have a strong enough balance sheet to justify traditional funding. Where these sources are not available they are looking to fund growth using alternative sources of finance.

In the past such sources were myriad, such as from friends and family, negotiating deals with well funded suppliers, early payment terms from customers and even credit cards, but the banks remained dominant. Over the past 20 years asset based lending has grown since it can advance more funds than the banks due to the specific pledge nature of its security. More recently we are seeing a new route to finance from peer-to-peer and crowd funding websites.

The website based sources appear attractive and are often easier for obtaining funding but they can incorporate obligations such as a personal guarantee for the loan from the directors.

In April 2014 the FCA (Financial Conduct Authority) introduced new rules on loan-based (money loaned) and investment-based (share subscription) crowd funding that require the lenders to carry a certain amount of capital, to be open about defining the risks and to have resolution procedures in place in case of the lending platform failing.

It is likely that the online funding platforms will become stricter and require more information from borrowers before making a decision, but if used wisely they offer a great source of funding to growing SMEs.

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Banks, Lenders & Investors General Insolvency Rescue, Restructuring & Recovery Turnaround

The new parable of the talents

 

“For to everyone who has will more be given and he will have an abundance. But from the one who has not, even what he has will be taken away.”

This conclusion of the biblical Parable of the Talents (Matthew 25: 14-30) neatly summarises the results of unrestrained and unregulated neoliberal free market capitalism, as propounded by Milton Friedman (Chicago School of Economics), the model by which business and economies have  been run since the 1980s.

But even before the global financial crisis of 2008 (and more so since) economists and academics like Paul Krugman (End this Depression Now), Jo Stiglitz (The Price of Inequality) and Will Hutton (Them and Us) were questioning the model and the latest to wade in has been Thomas Piketty with his dubiously-praised book Capital in the 21st Century.

Piketty’s book claims to provide evidence over two centuries of the ebb and flow of extreme inequality of wealth, leading to his thesis that wealth grows faster than economic output. His conclusion is to heavily tax the wealth creators which proposals have been embraced by those politicians looking to justify tax increases.

Capitalism itself has come under fire since 2008 largely because it has proved such a ruthless and unforgiving system for so many people.  But, it is also argued, like democracy that it is the least worst system for providing the economic growth needed to afford acceptable living standards for the most people.

But is the problem the system itself or its unregulated consequences? And how does any of this matter to the myriad small businesses that are the backbone of the UK economy and its hope for the future?

We would argue that the essential ingredients of a healthy capitalist economy are demand, ideas, investment, resources and leadership – all essentials for running a successful business.

What is a problem, is the outcome that has so badly affected so many people and businesses. In particular the notion of ‘too big to fail’ where the capitalist model of accepting failure was undermined by the political consequences.

This was addressed at a recent conference in London called Inclusive Capitalism, where among others Mark Carney, Governor of the Bank of England, argued for a return to high ethical standards in banking and for recreating fair and effective markets.

Sir Charlie Mayfield, chairman of the John Lewis Partnership, too, defended capitalism as a force for good and for social mobility, but proposed that it required rethinking business conduct and education, encouraging wider ownership  among employees and investing in employee training and development, all of which imply a shift from short term profit-taking or rent seeking to longer term thinking and investment.

All of which, too, is something any small business owner could have told them.

As for Piketty’s claims, at least they are now being challenged by the Financial Times. Increasing taxes on the wealth creators have not increased revenue collection, nor have such policies promoted wealth creation. 

Was St Matthew the first capitalist?

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County Court, Legal & Litigation Debt Collection & Credit Management General Rescue, Restructuring & Recovery Turnaround

Are businesses vulnerable to fraud?

 

One our investment portfolio companies, Music Room Direct, is a small internet retail business that supplies musically themed goods via online sales that are paid by credit card when the order is placed.

We were horrified to find that once the goods had been delivered the credit card transaction could be cancelled and the funds recalled. We immediately contacted our bank’s credit card administrator, who sent a form asking us to respond within 10 days.

We complied immediately but were horrified to find that our bank had already refunded the customer.

Fortunately on this particular occasion we were able to contact the customer who acknowledged their mistake  as an accounts department error and repaid the money immediately.

But when we questioned the administrator, Global Payments, which administers credit cards for several mainstream banks, it transpired that there is absolutely nothing we can do to protect ourselves from clients claiming a refund of the transaction.

While we acknowledge that consumers should be protected, this system clearly offers scope for the less scrupulous and fraudsters to order and pay for goods then to reclaim a refund when the goods arrive.

Have you come across this or any other “loopholes” that make small businesses vulnerable in a similar way?

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Are SMEs really MSMEs and what is the squeezed Middle?

 

We all use it without really thinking and assume we know what it means.

The acronym SME provokes puzzlement in some quarters and ire in others, according to Daily Telegraph business writer  Michael Hayman, who quotes King of Shaves founder Will King: “Get rid of this casual piece of profanity…It needs to be removed from the Oxford English Dictionary.”

So what is the problem? 

SME is short for Small and Medium Sized Enterprises and that, according to CBI director general John Cridland, means the M in the middle is a “forgotten army”, the middle-sized businesses on which the economy is relying for growth.

But it’s actually a bit more complicated than that since no-one agrees on the definition of small.

The UK and the EU use the same definitions for businesses, based on number of employees and turnover – Micro, Small and Medium – which actually would give us the acronym MSME!

Micro Businesses are those with fewer than 10 employees and turnover under £2 million, Small Businesses consists of fewer than 50 employees / turnover under £10 million and a Medium Business has fewer than 250 employees / turnover under £50 million.

It is argued that 95% of UK companies qualify as Micro Businesses. This has led to the setting up of a parliamentary group, the All-Party Parliamentary Group (APPG) for Micro Businesses, chaired by Anne Marie Morris, Conservative MP for Newton Abbot.

The CBI has calculated that middle-sized companies contain between £20billion and £50billion of unrealised economic output, and are best placed, unlike their smaller brethren, to take advantage of export opportunities in the emerging markets of the world.

The argument is that by lumping them all together the M, Medium, businesses in SMEs are neglected and don’t get the support they deserve.  Equally the other M, Micro Businesses, lose out by being lumped in with Small but actually can’t take advantage of government support aimed at the Small.

What do you think? Do you see yourself as Micro, Small or Medium?  Do you feel neglected? And should we replace SME with MSME?

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Banks, Lenders & Investors General Rescue, Restructuring & Recovery

If it doesn’t work the first time do it again only bigger

Funding for Lending has not stimulated bank lending to SMEs so what does the Bank of England do? That’s right, they’re extending the scheme, offering the banks loans at just 0.75% with no limits on how much the banks can borrow – but only if they lend more than they are receiving in repayments from customers.
And the formula applied by the Government makes it almost impossible for the banks to be able to fulfil the lending obligations. For the full details see the BBC’s blog by Robert Peston http://tinyurl.com/c38w4rp
All this has been announced at a time when the banks are also required to focus on recapitalising to even greater levels and when despite such initiatives SMEs are not borrowing, but instead are focused on controlling cash flow and paying down debt and are generally as risk averse as the banks.
So is the BoE missing the point or is the Funding for Lending scheme nothing more than excessive spin?
Which leads one to speculate whether Spinmeister Alastair Campbell is back in action behind the scenes.

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Is it Realistic for Private Businesses to Employ more Staff in 2011?

The majority of businesses in the UK are defined as small and employ fewer than 50 people while only one per cent of UK companies employ more than 1000 people.
Small businesses would generally be defined as having fewer than 50 employees, assets worth less than £5 million and a turnover less than £5 million, yet they account for two thirds of the UK’s private sector.
The Government is pinning its hopes of recovery on dramatically and quickly reducing the country’s budget deficit with a combination of cutbacks, including making an estimated 330,000 people in the public sector redundant, a figure revised downwards in November 2010 from its estimate of 490,000 the previous June.
This revision, albeit in human terms still a large number of people, is based on its forecast for growth in the economy in 2011 of 2.1% for all of which it relies on the private sector – the majority of which is made up of small businesses.
Economists and politicians are both emphasising that the opportunities for growth lie largely in increasing exports on the grounds that there is a burgeoning middle class in the fastest growing economies, like China, India, Brazil and Russia (the BRICS) with a growing appetite for sophisticated technology and household products.
But while this might be an option for businesses involved in manufacture it does not help those many small businesses providing services and products to local businesses and consumers in the UK only.
The UK manufacturing sector currently accounts for 26% of Gross Domestic Product (GDP) and the Government’s Department for Business, Innovation and Skills (BIS) published a White Paper proposing to expand adult apprenticeships by up to 75,000 by 2014-15 and to set up a new £50 million Growth and Innovation Fund, with financial support to SMEs to co-fund the costs of training for lower skilled employees.
Help with skills training by 2014-15 is hardly much use in 2011 and in any event growth will depend on being able to both increase sales and availability of finance from the banks to fund the additional working capital needed to support them.