Change is needed at every stage of the process, say experts

Mar 4 2009 By Karen Dent, The Journal

INNOVATION, explanation and a greater slice of the North East's public projects are what the region’s small businesses need to help them survive the recession. Karen Dent reports on the issues that small firms and support organisations want to see action on.

IF one job was lost from every small business in the North East, the cataclysmic redundancy figures that are being announced almost every week by large companies would appear insignificant by comparison.

Around 65% of the region’s private sector employment is in the SME sector but much of the focus on the UK’s problems is concentrated on big business. That is something that needs to change, according to BT’s regional director Chris Sayers.

"It’s almost an invisible impact of the economic downturn because it is almost at a personal level that it’s not being picked up and given the prominence that it needs," he says.

Mr Sayers chaired a BT-organised meeting of SMEs and organisations including the CBI, North East Chamber of Commerce (NECC) and the Federation of Small Businesses (FSB) in Newcastle to discuss practical solutions for companies struggling to deal with the recession.

NECC chief executive James Ramsbotham said: "The big challenge for us is that we’ve actually had such a long period of growth that people have got into a certain way.

"If you put a frog into a bucket of water and heat that bucket of water up, as long as you do it gently, it will never get out until it’s boiled to death. If you drop a frog into a bucket of water that is only one degree different, it immediately leaps out and does something different."

Small businesses are now being forced to make that leap. Mr Ramsbotham believes those that alter the way they work will emerge intact, rather than boiled alive, after the recession.

He said: "I was speaking to a motor retailer in Darlington two weeks ago and asking generally how things were. He said, ‘I’m now in exporting as well. I’ve got huge purchasing power because of my relationships with the people here and I’ve just sold 10,000 batteries to Germany and made a huge profit on them.’ Even the most unlikely of businesses can actually find that."

But finding help to reinvent yourself is not always that easy, despite the stream of Government schemes being launched with the aim providing help.

Robin Bloom, regional chairman of the CBI, said: "At the moment we’ve got an initiative-itis coming out of Westminster and a lot of this is soundbite and it’s politics, and delivery is a million miles away."

The banks also appear to have problems understanding Government initiatives.

Chris Alete, financial director at Newcastle architects _space, said: "I was reading about something called the enterprise finance guarantee – I was intrigued by this. Then I spoke to a few banks, four or five, and not one of them knew how this thing worked.

"And I said, ‘Hold on a second, you’re the guys who are supposed to be delivering it, but you don’t know how it works?’, and they said, ‘Well no, we haven’t been told’ and if they hadn’t been told, then me, the person on the ground who may want that support, how am I going to get it? I think that’s quite scary."