Tag Archives: Government funding

On-line service to replace Business Link

Business LinkSo it is coming to pass. As I speculated back in March, the new government is to close Business Link.

Mark Prisk, the business and enterprise minister, has now said: “The regional Business Links have spent too much time signposting and not enough time actually advising,”

“We’re going to wind down the Regional Development Agencies, and as part of those, we’ll be winding down the regional Business Link contracts.”

The minister’s plan is to replace Business Link with a better state-funded on-line service, backed up with a call centre and more use of existing private business consultancies.

There was no time-table announced however and I wonder how they can do this in the short-term. For instance outsourcing giant Serco have only just taken over the running of the service in the south east in a three-year deal worth £80m and there will be contracts to supply the Business Link service through-out the country.

Whatever is implemented I hope it is done in a speedy fashion rather than dragged out. We will get to a position where Business Link services have to continue because the contracts are still in place, but no adviser wants to join them and the existing staff are demoralised because of the axe hanging overhead.

The planned on-line service replacement must be well thought out and effective. There is so much information on the web now days that just creating a government site that repeats this information will not do the job. It needs to be able to cover a vast range of issues in an accessible manner, catering from the inexperienced start-up, to established businesses looking for solvency advice.

Or should we be limiting the focus of such government advice centres. The original Business Link was set up to encourage new and very small businesses, but lately had targets set upon them that pushed their focus towards SMEs that had 5 – 250 employees.

There is an argument that an established business could better afford to engage consultancy advice from the private sector and that the free support (presumably on-line) should concentrate on start-ups and businesses with less than 5 employees.

I wait with baited breath to see the next set of announcements on timetable and focus areas for the new service. I just hope that like almost all government IT projects, the implementation of the on-line service doesn’t over cost and under deliver.

 

Should government have a focus on growing new businesses?

Can government help start businesses?During the latest recession as skilled or senior professional people suffered redundancy, many decided to start their own businesses. Some escapees from the crash of the City actually became Investors into young businesses.

With the huge cuts to public spending now being implemented there will undoubtedly not only be direct job losses, but with contracts being cancelled and bought-in consultancy slashed, there will be massive collateral damage to the private sector as well.

This could be an opportunity to help some of the affected become self-sufficient and start their own businesses. Where else will they find a new job with the mayhem that is about to hit the jobs market?

There will be a wonderful pool of talented yet frustrated ex-employees that will be keen to make a new life of self-employment rather than face the despair of applying fruitlessly for a dwindling supply of suitable jobs. Surely now is the perfect time to help them achieve this.

However, the announced cuts already talk about reducing the regional development funds and I can’t see any attention being given to helping start-ups or growing businesses.

I think the new government is missing a huge trick here. This is the perfect opportunity to provide a focus on young businesses. Producing a programme that encourages entrepreneurs to grow their own companies and in turn delivering growth to the UK.

 

Why must a hung parliament mean doom for business?

Politicians in a hung parliamentWell let’s first look at the terminology “hung parliament”. It is a term that is designed to send shivers down your spine. Hung, drawn and quartered, a hung jury, hung from the highest tree.

It provokes the public into a sense of unease, if not outright terror. The danger is that this sense of doom can translate into a self fulfilled prophecy with less consumer spending as the public starts to gird their loins against the terrifying consequences of politicians having to put aside party self-interest in order to work together for the good of the Nation.

Yet need it really be like that? Apparently we are paying a good level of salary and additional benefits in order to attract the brightest of people to be MPs. People who say they put the interest of the Nation before all else. Yet we are fully expecting them to act like unruly gangs in a school yard, destroying the play equipment and breaking the school windows.

Shouldn’t we instead insist that they act like the intelligent public servants that they claim to be and put away the sling-shots and stones in order to work together to run the country.

While it was necessary to scaremonger about “hung parliaments” during the election campaign to stop the public from voting for that nice Mr. Clegg, it can stop now.

Germany’s three main parties work together as a coalition government, Greece has a single party. Which has the stronger economy?

With all that has happened recently to destroy the public trust in members of parliament, now would be a good time to show that they can after all behave responsibly and help to grow the economy, rather than see it wither for their own political self interest.

 

Can EIS make your business more attractive to Investors?

Should you use the Enterprise Investment Scheme (EIS)?The EIS (Enterprise Investment Scheme) was set up to encourage Investors, by giving them various tax breaks if they help to fund growing businesses.

The business must be set up as a limited company and the shares not listed on the stock market, which means a lot of small companies could use this to attract Investors, but I wonder how many are?

If your eyes glaze over at the mention of CGT Deferral Relief… and calling this a “scheme” doesn’t help, visions of unfathomable, complicated rules pop to mind… you may think that it is like most government business support, just too much trouble to be bothered with.

I recently went through the process of looking at EIS for Company Partners (a couple of potential Investors were keen to use it) and actually it’s not that hard.

You have to firstly make sure that your type of company qualifies, it must be small (

The company has to have been in existence for at least 4 months, but the business doesn’t need to be trading, since the investment could be used for example to start the company up (must start within 2 years).

Each Investor under this scheme can only have up to 30% of the company and the shares that are sold must be ordinary shares (no special rights). The investment goes to the company (by raising some new shares), rather than for instance to the business owner, by him selling his shares.

In return for investing into the company, apart from of course getting a part of the business, the Investor will get 20% of the investment back as tax relief and if the shares increase in value, there is no Capital Gains Tax.

Not bad eh? But there’s more… If the opportunity doesn’t work out, the Investor can claim any amount that they lose on the shares against their own tax.

It is all run by the SCEC (Small Companies Enterprise Centre) on behalf of the Inland Revenue and there is a nice service that they provide, where you can fill in a form to get them to look at your company and the shares you would issue to say whether you qualify. It’s called the advance assurance scheme. This assurance from the SCEC is useful for companies to show to potential investors.

If you want to do this, you should probably have your accountant delve into it for you, since there are always going to be some complications, but find out all you can yourself first.
Here are some links to find out more:
Company Partners (EIS)
Inland Revenue (EIS)

It seems a useful tool to encourage Investors towards your business, so I wonder why more companies don’t do so?

Oh yes, how did we get on? Well it took about 5 weeks for the SCEC to come back after we filled in our form and we did qualify.

 

What should replace Business Link?

Who will replace Business LinkThe Tories have vowed to get rid of Business Link, the government-funded business advice service in England, but what if anything will replace it?

Business Link has had over the years a mixed reputation. Your view of the whole organisation usually depended on which adviser you were allocated.

I certainly remember my original encounter with them. I was starting my first business, an IT consultancy and was looking for any advice and help I could get. Having made sure that I was at my free one hour consultation 10 minutes early, I sat kicking my heels until the adviser finally turned up 40 minutes late.

“I’ve been having trouble with the #%*! central heating, mate” was his reason; ironic really since his background and expertise turned out to be as a plumber. I then was entertained for 19 minutes by tales of his plumbing business, before being told the best thing I could do was to go on a business planning course. Since I’d just finished my MBA and had sat through more lectures on business planning than I cared to remember, I wasn’t feeling greatly helped.

I grabbed the last minute to try and describe what I wanted to do as a business, but he was only interested in getting me to sign his time-sheet to say I had received my advice.

However I have heard very encouraging stories from some of our members and so I try and remain positive, but I shall probably not shed too many tears if they do go. The question is what should replace them and what will happen to the £190m currently being spent on Business Link.

The view of the Conservatives, should they come to power, is that they will instead boost the role of the local enterprise agencies. These have services that overlap those of Business Link, but I have found these organisations to be quite confusing to young businesses.

Many are run by private companies and it can be difficult to tell which are commercial organisations looking for customers and which are non-profit. They also suffer from the old criticism of Business Link, before they started to get their act together, that there is no uniformity, each presents itself in a completely different way.

Now if we accept that we are not trying to put in place one uniform monolithic organisation, but to have individual local organisations that may be privately run, but meet certain standards and deliver a locally needed service that’s fine. However the public understanding of what a local enterprise agency is and does needs to be made clear.

Doug Richard, of Dragon’s Den fame, has the view that: “We must sweep clean the entire government funded industry of business support and leave behind solely an institution whose remit is to expedite and simplify the effort of small business to manage the burden that government places upon it.”

This implies that there are no government funded enterprise services, but that instead the government just concentrates on its own processes, making them easier for small businesses to deal with.

That is a reasonable argument, that entrepreneurs don’t any longer need all the information and services that ‘business support’ groups give out; after all we now have Google and the Internet. Just stand back and let us get on with it. Maybe using the funds instead to give tax advantages to start-ups.

I like to think that after the next election, whoever is in government would work on creating a ‘culture of enterprise’. This spans the entire spectrum of changing the perception and attitude of financial institutions to entrepreneurs, incentives to people starting a business and yes also reducing the red-tape.