If you’re small you have big champions willing to help

Oct 15 2008 by Karen Dent, The Journal

In difficult economic times, small businesses need all the help they can get to keep their heads above water. This week’s Small Business Week and the forthcoming Enterprise Week are both dedicated to helping small firms or entrepreneurs with the seed of an idea, as Karen Dent reports.

MONDAY marked the start of small business season. It was the beginning of the first of two weeks aiming to champion small businesses and wannabe entrepreneurs.

Small Business Week, which brings together a number of business support organisations and is backed by BT Business, runs until Friday and will be followed by Enterprise Week on November 17.

Both initiatives are staging events and offering advice to already established enterprises as well as trying to persuade people to put their business ideas into practice.

Bill Murphy, managing director of BT Business, said the group decided to launch a week dedicated to small enterprises because they form such a large proportion of BT’s customers.

“Over the last few years, we have become more focused on what small businesses need. Last year, small businesses were very much worried about tax and red tape. They are still worried, but now they are worried about finance as well,” he said.

Initiatives like Small Business Week and Enterprise Week are valuable for making people think about starting their own enterprises, according to Business Link.

“We take the initiative generated through those workshops, events and campaigns,” said North East spokesman Jonathan Lamb.

“We do see an increase in interest but it is always difficult to assess the impact. We have a service that helps enterprises 52 weeks of the year.”

More established firms can also receive the benefit from the shop window provided for entrepreneurialism.

“The profile of small businesses is being raised dramatically,” said John Wright, chairman of the Federation of Small Businesses (FSB) and the North East regional vice chairman of the organisation. “They are responsible for 53% of the country’s GDP and 60% of commercial innovation comes from small businesses.

“There are 4.6m small businesses in the country. In the North East, we want more entrepreneurs. We are doing everything we can to encourage small businesses.”

However, Mr Wright, who runs two training businesses on Teesside, said the direct effect of specialist weeks on small businesses struggling to survive on a day-to-day basis was minimal.

He said: “A small business already there and operating will be concerned about making sure they are here next year.”

Prior to this week’s £37bn bail out of the banking system, which comes with conditions attached that lending levels to small firms must return to 2007 levels, SMEs were being squeezed by the credit crunch. However, these problems appear to have had more impact on already- established firms rather than potential entrepreneurs.

“It’s only a minority of businesses that actually borrow from banks. A lot use savings, investment from friends and family,” said George Derbyshire, the chief executive of the National Federation of Enterprise Agencies (NFEA).

“One of the other problems is people in recent years have used equity in their homes to raise money and that is a source that has dried up.”

He has also noticed a slowdown in the number of inquiries from people looking to start their own business. “We are seeing a decline for a variety of reasons. A lot of people are being cautious before they commit themselves,” he said.

“But we may see that number of start-ups rise if we see an upturn in unemployment.”

But BT’s Bill Murphy believes this week’s cash injection into the banks will steady the ship. “There is no better time to start a business in the light of the Government’s moves to open up credit,” he said.

“And in spite of all the bad news last week, 7,000 people rang up to inquire about starting a business. Entrepreneurs are out there. They are saying ‘we’re going to sail into this storm’.”

According to figures from Barclays, which track small business start-ups, around 380,000 enterprises are expected to be set up this year, compared to 430,000 in 2007.

The bank’s statistics showed that 800 businesses were established in the Newcastle area during the first half of the year, on a par with 2007. The study anticipated that the figure will hit 1,600 by the end of the year.

The North East has traditionally lagged behind other parts of the UK when it comes to business creation and One NorthEast’s regional economic strategy has a target of creating 22,000 new enterprises by 2016.

Tim Pain, One NorthEast’s head of business, enterprise and skills, said: “The number of businesses in the region in the last couple of years has grown at a faster rate than any other part of the country – a 22% increase between 2005 and 2007.”

He believes initiatives like Small Business Week and Enterprise Week, which ONE supports, raise the profile of starting a business, but they work because they are linked to other efforts throughout the year.

“I don’t think on their own they would achieve very much but they provide a focus to discuss enterprise. It’s almost like a big advertising campaign, it does focus the mind,” he said.

“On its own without the year round support, it wouldn’t do so much. The figures for start-ups in the region are definitely on an upward trend.

“It’s difficult to make a direct connection but we have been spending more and more time on these type of activities. It seems to be creating an impact.”

Enterprise Week’s particular focus is on nurturing young entrepreneurs but ONE is looking to provide more specialist support for other people who may have considered starting their own businesses.

The FSB and NFEA are also keen to encourage people who may not be considered ‘typical’ entrepreneurs to think about going into business.

“We want more women entrepreneurs,” said the FSB’s John Wright. “They make up 50% of small businesses in the US, here it’s 26%. If we can encourage more woman to start businesses, that’s great.

“It’s also important that the message is brought through to students at school and they have every encouragement. Not everybody goes to university.”

George Derbyshire from the NFEA agrees: “Lots more people could be potential entrepreneurs – either immediately or in the future, and increasingly people at the other end of the age range at the end of their working life.” But the impact of the economic crisis on the region’s entrepreneurial efforts may take a while to materialise.

“There may be fewer market opportunities, but often if people are made redundant, they may consider a new start,” said ONE’s Tim Pain.

“I don’t think anyone knows what the effects will be right now.”