Martyn Benson
Following the May 2010 General Election, UK businesses are seeing a different attitude to business support by Government. EU funding for support had already reduced significantly after 2008 but now the Regional Development Agencies (RDAs) have lost virtually all their power and responsibilities (and will ultimately close down). Regional Business Links have been severely ‘trimmed’ and close in November (replaced by a National Call Centre and a modified national web-site).
Numerous business support grant schemes that were administered via RDAs or Regional Government Offices have been discontinued.
In view of the changes but the obvious current need in the UK (and in many other countries) for economic growth, it is interesting to consider the question of how it will be possible to ensure a scenario of Business Sustainability, Development and Growth. It is also apposite to consider what factors in business support might be important in enabling that scenario – hence the reference to business incubation.
Business Sustainability, Development and Growth:
Probably very few practitioners in business support – i.e. the Advisers and Consultants actually working with businesses - would have given unqualified endorsements as to the previous UK Government’s processes in business support – even before the economic downturn of 2007 - 2008. However, being fair, the objectives were those above – even if the outcomes did not always match the rhetoric.
In 2011, Government objectives are said to be the same but the changes mean that it is possible to question the likely outcomes of current policies.
Business Links were far from perfect – but did have the benefits of some local knowledge and the possibility of business owners having face to face contact with an individual who could have been trained, or had gained experience, to a relevant standard. Chambers of Commerce, prior to squeezes on their budgets, usually had support staff – some local authorities likewise.
In the UK, the brave new world of Autumn 2011 will see ‘start-up’ and developing businesses seeking advice, information and other guidance largely relying on:
• Small numbers of local support schemes that have managed to obtain funding because the main clientele will be from disadvantaged and/or under–represented groups.
• Business Link National Call Centre but will its staff even know where say, Blyth, is – bearing in mind it could actually be one of two totally different settlements with totally different catchment areas?
• Business Link national web-site but not everyone can find their way around as large and as complex a site as it needs to be in order to replace human inter-action.
• An Enterprise Allowance Scheme for the long-term unemployed considering (or being forced to consider) self-employment. A scheme that by comparison with its 1990s predecessor pays less out in real cash terms and has a shorter, shallower advice and support process.
• ‘Professionals’ – i.e. Accountants and Solicitors who are normally very competent in their own fields but may not see ‘the big picture’ in terms of potential business opportunities or challenges.
• Volunteer Business Mentors – who may be very good at running their own businesses or volunteers with banking experience - who might actually have been able to understand their customers’ problems in operating businesses. However, as many may need training in working with businesses, are the numbers of mentors needed going to initially be available and with the skills needed to assist businesses – especially bearing in mind that ‘start-ups’ and developing businesses are different ‘animals’?
It is in the circumstances set out above, especially in the time that it takes the new national business mentoring scheme to bed down, that business incubation should be able to demonstrate its worth as a business support/business development process.
Prospective ‘incubatees’ should be still be able to enjoy ‘one to one’ inter-action with experienced business advisers who are part of the service provided by business incubators and also to benefit from the other typical parts of a business incubation service.
It is the writer’s view that the actual business incubation process should include:
• An initial unbiased assessment of the business owner and the potential business. (Probably best done by using a simple ‘diagnostic tool’).
• If necessary, access to ‘business start-up’ training.
• Access to suitable business advisers and preferably also to business mentors with relevant sectoral experience.
• Advisers readily available in: the pre-start scenario, as the business launches and advisers and mentors available as it develops.
• A facility to refer a client to banking, financial and other professional service providers (e.g. accountants and commercial lawyers).
• Awareness of relevant funding available to clients from grant schemes – local, regional and national and commercial sources.
• The ‘incubator’s’ own ‘networking’, ‘inter-trading’ and training events plus a regular ‘newsletter’.
• Almost certainly, introductions to local business networks – e.g. Chamber of Commerce, ‘Buy-Local’ (supply chain link), Manufacturers’ Groups etc.
• Links to local academic institutions that can provide specialised research, student placements e.g. STEP (Shell Technology & Enterprise Programme) and/or have ‘knowledge transfer’ programmes.
• Links to trade support – whether for export or import.
• Finally, the scope to act as an ‘accelerator’ when a business moves forward from its ‘needy’ stage (or the facility to ‘signpost’ to an ‘accelerator’).
On that basis, ‘incubatees’ could well be in a very favoured position by comparison with other new and ‘early days’ businesses. Those other businesses could, especially in areas where a regional Business Link was the only significant form of support and where suitable mentors are thin on the ground, experience a potentially damaging reduction in business support. The current significant differential in average 3 year survival rates between ‘incubatees’ and ‘non-incubatees’ (in favour of the former) may well increase. However, by supporting larger numbers of ‘virtual’ clients, in addition to resident businesses, ‘incubators’ could play a valuable role in the work required to achieve business sustainability, development and growth.
Martyn Benson FIB FRSA FCIB (Business Advisor)