As a new year approaches, BQ Yorkshire editor Mike Hughes looks at the essential steps for SMEs setting off on a new journey.
It is rare that someone just ‘becomes’ an entrepreneur. If you are going to succeed it will have been in your personality and your character since you were a kid, just waiting for the lightbulb moment to start the whole adventure. But going from there to running a business is a long and challenging road, so it is good to know that you can share the burden with people whose whole career is based around how many small businesses they can help to succeed.
But even that idea can challenge an SME. When your dream is your own you want to protect it and make success your personal way of showing how capable and skilled you are. So needing to bring someone in to help can be seen as an admission that being an entrepreneur isn’t always about a single spotlight on only one star – but we all need the backing group, the chorus and the producers as well.
So no true BQ Yorkshire entrepreneur takes all of that spotlight. It needs to be an early decision to build a team, bringing in the right people, with the specific skills you need to move to the next level. It’s no reflection on you; instead their decision to work with you is a vote of confidence that you are the right person to drive the investment forward.
So who needs to be among the first signings as Yorkshire men and women build a premier league business? They need to have a checklist that includes structured funding, equipment, a base and a sellable brand.
Financial stability will be a priority from day one. Drip-feeding the right amount of money into the right spending pots can be a challenge, particularly when there is a temptation to secure that key piece of expensive equipment rather than travel to an important European sales conference.
Even for a very new business, there will always need to be a route to expansion and a good relationship with an experienced expert can almost literally be worth its weight in gold. There are plenty of funding options out there and just a few weeks ago the most recent report on the situation said £20bn could be lost because SMEs didn’t know their way around the market.
The Case for Raising SME Awareness of Alternative Finance, compiled by Cambridge University Centre for Alternative Finance and GLI Finance said four UK banks provide 80% of SME lending but 56% of SMEs still don’t know about alternative sources.
Co-author Dr Louise Beaumont said: “Lack of awareness amongst SMEs of the financing options available to them – despite a plethora of well-intentioned documents, reports and guides for SMEs - is an issue that threatens to undermine the UK’s economic recovery.
“We must think less about individual policies and mechanisms in isolation and much more about the bigger picture. We need to do the simple things much more effectively to enable SME behaviour change.
“It is imperative the Government now leads the charge, supported by industry groups and industry itself, in order to ensure SMEs get the help they need to grow – not least to give the Northern Powerhouse a fighting chance, given that SMEs in the north are having their overdrafts slashed at twice the rate of SMEs in London.”
That has to be the aim of any support network for Yorkshire SMEs – to support their growth and therefore contribute significantly to the Northern Powerhouse’s chances of becoming the most transformational business movement in the country. BQ has always recognised that such economic growth starts with our entrepreneurs, which is why it is so important that their awareness of the help they can get is as broad as possible from day one.
The legal structure of a new SME has to be watertight as well. Compared to the rush of innovation and applause, such matters can seem dull, but if new entrepreneurs immerse themselves in the scaffolding needed to support their ideas, they will be able to build more impressive structures, relaxed in the fact that someone is looking after the paperwork.
A recent report from the Legal Services Board underlined how crucial legal support is for a new business and how acute the need is for SMEs to get sound advice across the board.
With responses from 10,000 businesses, it asked about the effects of unaddressed legal issues and found that 23% of SME businesses reported significant loss of income, 12% reported an increased cost, 9% reported damage to their reputation, and 6% - hundreds of firms - reported that employees had to be shed or the business closed down.
Overall, 46% of SMEs said that unaddressed legal issues had hit their business, with the average financial cost per issue being £13,812.
The challenge of keeping up to speed with every new sector and its implications and needs is met head-on by our hugely experienced army of accountants, advisers, financiers, lawyers and specialists. For instance, robotics are transforming healthcare and industry, medical sciences are helping tackle the most complex of problems which seemed lost causes, and digital innovation is changing almost every aspect of our personal and business lives, while also creating its own specific issues like data protection, privacy, cyber security - and the hazards of some legally-alarming social media!
These sectors have advanced beyond recognition and the impact they are having on regional economies has soared. One of the critical advantages each of the companies in this special report can offer is that they will know what is coming next and what SMEs need to take advantage of the opportunities.
The matrix of support they can offer comes from years of experience not only in their particular specialisms, but in dealing with individual entrepreneurs and knowing they will have different strategies and targets compared to full-blown manufacturers with 50 years of production behind them.
These are Yorkshire businesses with Yorkshire integrity and determination, from the start-up to the people who will help them achieve their long-term dreams, and BQ will be there to help as well – reporting and supporting.