UK Government Supporting SME Growth by enk60739


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 Enabling company principals to advance their
 business and achieve their goals by providing
 them with the best available assistance from
 the best available experts in a cost-effective
 and professional manner

Encouraging, the                         affecting employers                     The number of UK businesses
                                                                                 declared insolvent decreased
Coalitions’ first 90                 Commenting, David Frost,                    by 19.1 per cent in the second
days                                 Director General of the British             quarter of 2010 compared to
                                     Chambers of Commerce, said:                 the same period last year.
In a review of the Coalition
Government's first ninety days       "This review shows real,                    There were 4,080 compulsory
in power, the British Chambers       balanced progress against nine              liquidations in the second
of Commerce (BCC) has                of our twelve core objectives,              quarter of this year, a slight
argued that there have been a        so the Coalition's overall                  increase on the first quarter, in
number of positive and               progress after ninety days has              addition to 1,311 other
encouraging decisions.               been encouraging. Early                     corporate insolvencies
                                     action on deficit reduction and             including receiverships and
There are still areas requiring      burdensome employment                       voluntary arrangements.
urgent action before the end of      regulation has been strongly
the year.                            welcomed by business - and                  The fate of businesses now lies
                                     many of the measures in the                 in the ability of the
Ahead of May's General               Chancellor's emergency                      management, combined with a
Election, the business group,        Budget struck the right                     rise in liquidity from increased
which represents 100,000             balance.                                    lending from banks.
companies across Britain, set
the incoming administration          "However, business wants to                 An immediate withdrawal will
twelve clear policy challenges -     see more progress in areas                  leave businesses in a worse
a prescription to return our         such as international trade and             position than they were in
economy onto a sound and             reform of the UK's planning                 during 2008.
sustainable footing.                 system. While the Prime
                                     Minister has led a trade
The Government's actions on          mission to India, we have not
each of the proposals in the         yet seen the appointment of a
BCC's 'ninety day plan' has          dedicated trade minister, nor a
been given a progress                focused strategy for a strong
assessment, with three ticks         export economy. Many of the
indicating progress that has         Coalition's proposals on
either 'met or exceeded              planning have also been
business expectations'.              disappointing, including the
                                     decision to abolish the
A maximum of three ticks             Infrastructure Planning
were achieved in three areas,        Commission.
which included:
                                     "We challenge the Government
   Publish a credible plan to        to build on the good progress
   reduce the budget deficit         it has made over its first
   and restore confidence            ninety days, and to look again
   Freeze the public sector          at areas where it can do more
   wage bill and reform public       to enable wealth-generating
   pensions                          businesses to drive a lasting
   Begin a systematic review         recovery."
   of existing regulation

                                           ISSUE 52 – AUG 2010
                                   Advance is published by ICFBA Holdings Ltd.
Achieving Success                     Track sales-to-expense
                                      ratios each month in order      You don't have to become an
with Effective                        to know when to adjust          accountant to be a successful
Financial Management                  spending.                       small business owner, but if
                                      Understand how to monitor       you don't manage your
Adapted from an article by Jim        inventory levels with regard    business' financial information,
Blasingame                            to projected sales,             you will fail.
                                      receivables and cash.
At the end of the 20th century,                                       Set this in stone ... Success
                                      Learn how to calculate
only 10 years ago, research                                           requires you to manage
                                      Accounts Receivable days
showed that half of small                                             financial fundamentals.
                                      and Accounts Payable days,
businesses failed in the first
                                      and understand their
five years. Recently, similar
                                      relationship to each other,     Unified
research showed the mortality
                                      plus the impact of that
rate for small businesses had                                         Communications
                                      relationship on cash flow
increased by 20% to half
failing in the first four years.      and working capital. If         Over 40% of businesses now
                                      your company is                 pilot unified communications
                                      experiencing rapid growth,      (UC) solutions as a key
Neither of these studies
                                      disregard this fundamental      technology. Find out in future
offered a reason for such a
                                      at your peril.                  editions of Advance – The
high failure rate, nor the
acceleration of failures.             Develop a long-term             Business Magazine, why over
                                      capitalization strategy that    70% of them are looking to
Of course, there are many             blends retained earnings        outsource and why more
reasons why a business fails.         with both short and long-       companies than ever will be
But the predominant                   term bank debt.                 using UC. Don't allow your
contributor to small business         Learn how to identify the       organisation to get left behind!
carnage is failure to                 top three financial             Business benefits include (but
understand the financial              indicators that point to        may not be restricted to) the
fundamentals, more                    impediments to                  following:
specifically, not understanding       profitability.
cash flow or how to capitalize                                           Increase in sales,
                                      Acquire a complete                 productivity and
growth.                               understanding of the               competitiveness
                                      difference between cash
So, if you don't want to              and accounting, and learn          Cost effective
become part of a gruesome             how to build and use a 12-         Reduce travel and
statistic, take the following                                            employee costs
                                      month cash flow projection.
suggestions seriously:
                                                                         Greater efficiency
   Produce regular (at least       If you aren't practicing these
   quarterly) and accurate         fundamentals, the cold sweat       With seamless integration for
   financial statements            popping out on your forehead       all your business IT and the
   (balance sheet and profit-      right now should motivate you      added benefit of saving time
   and-loss).                      to kick your financial education   and money, work smarter not
                                   into high gear.                    harder.
   Hire an accounting firm to
   help you. Too expensive?        If you pay attention to these
   How expensive is failure?       financial fundamentals - some
   Purchase and use one of         you can delegate and some
   the financial management        you can't - you will
   software programs. Ask          significantly improve your
   your CPA for a                  chances of staying out of the
   recommendation.                 small business obituaries.

                                             Page 2 of 7
HMRC issues phone                  deleting it permanently."               members' real strengths
                                                                           and weaknesses before
call scam warning                  HMRC thoroughly investigates            sending them off for
                                   phishing attacks and works              training. If they don't
HM Revenue & Customs
                                   with other law enforcement              need the training, don't
(HMRC) is warning taxpayers
                                   agencies in the UK and                  waste their time and your
to be vigilant following reports
                                   overseas. In the last 18                money on it.
that thieves are making phone
                                   months, scam networks have              Working with providers that
calls pretending to be the
                                   been shut down in a number              truly understand your
                                   of countries, including Austria,        needs. Training
                                   Mexico, the UK, South Korea,            consultants should take
The fraudsters inform
                                   the USA, Thailand and Japan.            time to really understand
taxpayers they are due a tax
rebate, and ask for their bank                                             your needs, getting to the
                                   HMRC strongly advises                   core of your issues to help
card details over the phone.
                                   customers to:                           bring about positive
They then attempt to take
                                      Check the advice published at        change.
money from the account using
the details provided. Victims         ex.htm to see if the email you       Establishing measurable
risk having their bank                have received is listed              returns. It may take some
accounts emptied and their            Forward suspicious emails to         time and effort to establish
personal details sold on to           HMRC at                              the metrics and
other organised criminal     and         benchmarks but
gangs.                                then delete it from your             measurement is essential
                                      computer/mail account                to know if it's been a valid
The warning comes amid a              Do not click on websites, links      use of company resources,
recent surge in the number of         contained in suspicious emails       as well as making it easier
tax scam "phishing" emails            or open attachments                  to defend your budget.
reported to HMRC. In the              Follow advice from
last three months, HMRC has 
shut down over 180 websites                                             Use Conferencing
that were responsible for          Making the most of                   Online to Reduce
sending out the fake tax
rebate emails.                     training budgets in                  Carbon Footprint
                                   recessionary times                   Online conferencing is nothing
Chris Hopson, Director of                                               new, but what is new is the
Customer Contact at HMRC           Make the most of your training       way businesses are waking up
said:                              and development budget in            to the strategic importance of
                                   the face of the current              using this technology to
"We only ever contact              economic climate by:                 reduce business overheads.
customers who are due a tax
refund in writing by post. We         Remembering that training         And with carbon management
never use telephone calls,            is an investment.                 playing an increasingly
emails or external companies          Companies that continue           important role in any small to
in these circumstances. We            their investment in training      medium enterprise, CSR
strongly urge anyone receiving        and development during a          policy, it is worth knowing that
such a phone call not to give         recession will have an edge       more than 25% of an average
any information to the caller,        on the competition, with          businesses carbon footprint
but report it to the police           team members who have             can be attributed to travel.
straightaway.                         continued to sharpen and
                                      develop their skills while
"If customers receive an email        others have not.
claiming to be from HMRC, we          Ensuring your training is
recommend they send it to us          targeted and really needed.
for investigation before              Assess your team

                                             Page 3 of 7
What banks want to                    You have bad credit history     that your business is ready for
                                      or no credit history            financial investment and has
see from SMEs                         You lack assets and lack        real growth potential.
So why aren‟t banks lending to        recurring sources of
small businesses, this article        revenue                         Put Your People First
outlines what banks want to           Your businesses is not          or Risk Your Business
see from SMEs before agreeing         scalable
to show the money.                                                    Suffering
                                   The lending terms are              The last two years have been
Bank lending to small              undeniably strict at present.      extremely challenging for
businesses remains the hottest     A survey by the Institute of       SMEs. Budgets across
of topics. So what can an          Directors in July 2010 claimed     organisations have been
owner-manager do to convince       that one in three firms            examined, and tough decisions
a bank that their business is      applying for debt finance in       have been made about which
worth backing? The bottom          the time period 1 January          areas to squeeze. In many
line is that a bank will always    2010 to June 2010 were             cases, training budgets have
look for the following:            declined by their bank. The        come under fire, partly
                                   survey also showed that the        because it is seen as a
   Security against an asset       lending criteria has become        dispensable cost.
   and the best assets to have     more restrictive with regards
   are inventory and/or            to the amount of security          Training cuts might seem like
   property                        requested by the banks.            a good temporary solution that
   A good trading record, both                                        can be reversed as the
   past and projected. Also,       Certainly banks are getting        markets change. But
   if your customers are solid     tougher with would-be              employees have long
   businesses and you have a       borrowers, as Peter Ibbetson,      memories. If they are left
   good debtor book, the bank      chairman of business lending       feeling frustrated by their
   could look to lend against it   at the Royal Bank of Scotland      development, and feel like
   A well-written business plan    said recently in an interview,     their company is neglecting
   that makes you look             where he insisted that his         them, then as the market lifts
   professional. This doesn‟t      institution was right to go over   and jobs become more
   need to be long, but it         the books of companies like        plentiful, they will look at their
   needs to be able to explain     never before, given the            options.
   the business and make           current economy.
   sense in financial terms                                           It can be argued that training
                                   It is appropriate that banks       really is an essential part of
                                   ask companies for their            any business. Experience has
Always go to the bank and get
                                   business plans and forecasts       shown brilliant results from
a facility before need support,
                                   as well as their businesses        investing in good training;
because when you do need it
                                   financial performance history.     motivated staff members who
urgently, it will always be
                                   That‟s as much for the benefit     are more productive, and
harder to get.
                                   of the business and its growth     armed with new skills are best
                                   as it is for the bank.             placed to deliver the best
Banks are risk averse and
focusing on profit more than                                          possible work for your
                                   The banks will no doubt            business.
ever – it is easier to gain
                                   protest that the likes of
financial support for growth
                                   business secretary Vince Cable     Any experienced HR
rather than for survival.
                                   are telling them to be far more    professional will tell you that in
                                   prudent while at the same          order to keep your staff, you
When it comes to start-ups
                                   time telling them to lend much     need to invest in their
and small businesses, banks
                                   more. But banks have always        development and show an
have never been champions of
                                   been prepared to support           interest in furthering their
risk capital.
                                   viable businesses and they do      career. Otherwise what
                                   have money to lend.                loyalty should they have to
Any bank is likely to turn you
away if:                                                              you?
                                   Remember it is your
                                   responsibility to demonstrate

                                             Page 4 of 7
Social Funding for                 launching later in the             business types for example IT,
                         construction and creative
                                                                 media. There are also lots of
                                   He explains: „We think it is an    grants available for innovation
Those looking around for           exciting way of getting a          and research as well as to help
alternatives to the low interest   financial return, with returns     new businesses to grow.”
rates in high street savings       of around 6 to 9 per cent.
accounts right now may want        And if you look at business        She added: “Typically you can
to look at a new investment        lending as a market, bank          get business grants and other
business offering returns of       rates range from 6 to 18 per       awards for anything from £500
between six and nine per cent.     cent for unsecured loans.          to £1 million and you might be
                                 There will be a lot [of banks]     able to apply for multiple
Funding Circle – a new type of     watching this market 
with         schemes or grants. There are
„social lender‟ – is launching     interest.
„                        also a lot of interest free loans
this summer and it will follow                                        available for capital
a similar model to that of the                                        investment, particularly in
                                   Research shows that people
better-known Zopa exchange,                                           energy efficient assets.”
                                   really want to support small
where the company acts as a
                                   businesses in the UK as small
platform for investors wanting                                        The Government provides a
                                   businesses represent a really
to lend their money for a                                             number of financial products
                                   important part of the country‟s
return on their initial                                               for helping small and medium

                                                          businesses, including Grants
                                                                      for Business Investment and
Funding Circle will differ,        Small businesses                   Research & Development, the
however, in that it lends to       could be missing out               Enterprise Finance Guarantee
established businesses – both                                         Scheme, and small loans. In
limited companies and sole         on funding                         addition, many other
traders.                           opportunities                      organisations offer funding for
                                                                      certain types of business
Businesses will be able to         It is estimated the total value    investment and growth.
borrow between £5 and              of support schemes available
£50,000 and investors can          to UK business is £5 billion per
lend anything between £20          year. However, many                Networking – Editor’s
and £2,000 per business –          businesses are either unaware      View
although it is recommended         of the grants on offer or make
that investors spread their risk   mistakes completing the forms      I wasn't aware that I was a
across as many businesses as       when applying, according to        networker when I was in
                         accountancy firm Hurst, which      business in my 30's. In fact it
                                   highlighted the issue after        was well into my 40's that I
The company is expecting           seeing an increase in demand       realised what I was doing
considerable interest from         from businesses seeking            when I was out and about
both investors and borrowers       alternative sources of funding     meeting people.
as high street cash spreads        and advice on grant
are currently very wide.           applications.                      I never put 'networking' into a
Savers are continuing to find it                                      box; I just liked meeting
difficult to secure decent         They have argued that              people and connecting them to
interest rates, while business     financial support from             one another if they needed
borrowers face steep interest      advisory, guidance and             help with a problem or an
rates to gain business loans.      information services is also not   opportunity.

                                  being taken advantage of.
                                                                      The term 'networking' sounded
                                   Partner at Hurst and specialist    clinical and task orientated,
James Meekings, co-founder of
                                   in compliance and advisory         'making friends' with people
Funding Circle, says that the
                                   services, Helen Besant-            was my goal and intention.
final part of the technology for
the online systems is still        Roberts, said: “Lots of grants
being built, with a view to        are set aside for specific

                                             Page 5 of 7
Decision Making - The               when people are going through    should notice that they have a
                                    doors to a shop or an office     tendency to reject their
Default Alternative                 building. People coming in       'default alternatives' more
                                    and out of a door will queue     often than other people.
Our brains have developed
                                    and fight each other to get
over hundreds of thousands of
                                    through the door that is         Historically the 'default
years and our evolution has
                                    already open rather than         alternative' for 'how do I make
allowed it to make some
                                    opening one of the other         enough money to survive' has
decisions very rapidly. This
                                    doors.                           been 'get a job'. In recent
development has a Catch 22
                                                                     years this has started to
when it comes to making
                                    Another example is the 'sand     change. Government
decisions. For survival
                                    pit'. In this example someone    initiatives in schools and for
purposes our brains have
                                    has buried a bag of gold in a    the rest of the population have
developed very useful
                                    sand pit. You are given a        introduced into people's
mechanisms however these
                                    shovel but are only allowed to   psyche that a possibility is 'do
very mechanisms can cause
                                    dig in one spot. You do not      it for yourself'. Other
real issues when making
                                    know how many people have        influences in society have
business decisions.
                                    been digging in the sand pit     made this idea easier to
                                    before you.                      implement. Easily affordable
One of the mechanisms that
                                                                     computers and telecoms make
the brain has developed is
                                    The next diagram is of the       it very easy to work from
what can be termed the
                                    sand pit as viewed from          home. eBay has significantly
'default alternative'. In order
                                    above. Remember the first        simplified the 'route to market'
to make decisions easily and
                                    place you think of to dig:       for many people (and we have
quickly we have developed a
                                                                     all heard stories of people who
way of thinking so that our
                                                                     have made significant amounts
brains do not have to process
                                                                     of money using eBay).
too much information. We all
have our own 'default
                                                                     Whether you are an
alternatives', both
                                                                     entrepreneur or not, being
entrepreneurs and non-
                                                                     aware of your own 'default
entrepreneurs; however
                                                                     alternatives' is a great way of
entrepreneurs seem to have
                                                                     improving your opportunities
the ability to switch their
                                                                     and your life. To try this out
'default alternative' off (at
                                                                     for yourself simply try spotting
least temporarily and in some
                                    When you have chosen your        your own (and other people's)
situations). The good news
                                    spot, look at the diagram at     'default alternatives' over the
for all of us is that by
                                    the end of this article. Did     next few weeks. Once
understanding our own 'default
                                    you dig in the green shaded      sensitised to them you will find
alternatives' we can learn to
                                    area?                            a world of opportunities
switch them off when we need
                                                                     opening up for you.
                                    This is not a good decision
                                    given the situation. If          For your information this is
So what is a 'default
                                    everyone digs in the green       where the vast majority of
alternative'? See above picture
                                    shaded area and a lot of         people choose to dig:
of an escalator, used here to
                                    people have dug in the sand
provide a simple example.
                                    pit before then your chance of
                                    finding the gold is very slim
The 'default alternative' for all
                                    indeed. You will also notice
but one person is 'take the
                                    that the green shaded area is
escalator' even though the
                                    a lot smaller than the rest of
stairs are not very long and it
                                    the sand pit.
means waiting in a queue.
                                    When you observe
You can also see this effect
                                    entrepreneurs of all ages, you

                                             Page 6 of 7
The ‘International                   wider international markets         be useful in the pursuit of
Confederation for Business           (through the contacts ICFBA         contracts on an ongoing basis.
Advancement’ (ICFBA), is a           have developed over the years       With guidance and advice,
confederation of business            in every industry and major         clients can become self-
professionals who have been          country worldwide) results in       sufficient in the identification
working together for over 10         new sales opportunities and         of new business opportunities,
years as top-level advisers for      enhanced relationships for the      ideally suited to their
all types and sizes of               client.                             particular strategic
businesses throughout the                                                capabilities, and successfully
world.                               ICFBA are advised of projects,      generate new business.
                                     being put out to tender
ICFBA Partners have been             worldwide on a daily basis.         ICFBA Partners are always
acting as business mentors           ICFBA Partners can identify         willing to co-ordinate projects
and advisers to the                  those projects that may be          from organizations worldwide,
management teams within              suitable for the client business.   making effective use of
client organisations, focussing                                          Accredited Partners - often
on restructuring business as         ICFBA Partners can arrange for      through regional ICFBA
required and helping to              clients to gain experience in       administrative offices - to
develop the businesses in            pursuing a number of major          ensure that the best-qualified
every possible way.                  international contracts and         specialist in the appropriate
The experience gained when           also include them within the        industry is selected to lead and
assisting clients in marketing       „valued resource pool‟ that will    manage each project
their products and services to

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Africa, South America, United Kingdom & United
States of America


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                                               Page 7 of 7

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