Finance Fitness Inititative
I started my business at the bottom of the last recession, so I understand the challenges that small business owners are facing. In a stagnant market it takes confidence and courage to move forward and grow.
But confidence comes from a belief that things will get better. That’s why Government is doing all it can to provide a stable long-term framework that gives business the confidence and the ability to plan, invest and grow.
That is why we have cut the small firms rate to 20% and are cutting the main rate of corporation tax from 28 to 23%. And it’s why we are working with the banks to ensure they meet their SME lending targets in 2011/12 and extending the Enterprise Finance Guarantee to make £2bn of loan guarantees available to viable small firms through to 2014.
But changing taxation and ensuring finance is made available is only part of the picture. We want to make sure startups and existing businesses have the best advice possible on managing their money and attracting investment for growth.
It is worrying that only a quarter of small businesses rate themselves as good at getting external finance and 15% of small firms don’t bother applying for finance at all even though they need it. I know that getting in touch with someone who can provide advice, such as an accountant or other adviser, makes a real difference: the majority of small firm employers who do seek out and receive advice report a marked improvement in business performance.
Yet our research indicates that only 9% of small businesses seeking an overdraft and one in five of those applying for a loan sought external advice before approaching their bank. That wouldn’t be so much of a problem if they were all well qualified but, worryingly, a reported four out of five financial decision-makers in UK small firms have no formal training in financial matters.
So to help more businesses get the advice they need, I have recently launched Finance Fitness – a campaign to get more and better information to businesses to enable them to make more of their finances. You can access information about what is available at www.businesslink.gov.uk.
We want to improve awareness of, and access to, information on managing cash flow and to highlight diverse sources of equity finance. Above all, though, we want to improve knowledge among small business owners of concrete actions they can take to increase their chances of success when seeking finance. To this end, we are working with financial advisers to enable small businesses to access help more easily and, through www.businesslink.gov.uk, providing firms with impartial information and signposting.
We are also engaging closely with partners to deliver expert advice through workshops, events and consultations and other channels. This includes working with ACCA, the ICM, the Forum of Private Business and the credit reference agency Experian to promote good prompt payment practice amongst SMEs. Experian’s latest survey data indicates that SMEs typically get paid over 16 days beyond agreed contract terms. To reduce this, we are helping small businesses to put in place robust, effective and clearly-understood invoicing practices, and making sure they know their rights and how to enforce them.
Businesses repeatedly tell me they want to take advice from people they trust, who have real, hands-on experience of successfully running a business. For this reason the Government has been working with external organisations, including ACCA, to develop a national network of business mentors who can give useful, practical advice. If you want to register as a mentor, or refer clients to where they can seek a mentor’s advice, you can do so at www.mentorsme.co.uk. You can keep up to date with everything that is happening via the Business Link website – www.businesslink.gov.uk.
Overwhelming evidence shows that businesses that use external advice are more likely to thrive and grow, which is why we want businesses to recognise the value of that advice and feel confident in accessing it. Together we can help small businesses drive sustainable growth in our economy.
Mark Prisk, minister for business.