It’s a central plank of the Government’s policy to stimulate economic growth — supply cheap money to banks and building societies to encourage them to lend. It has come in many forms — from lower interest rates and quantitative easing to schemes like Funding for Lending (FLS), Project Merlin and the National Loan Guarantee scheme.
So how is it going?
Not great, it has to be said. This week, data from the Bank of England reveals that lending to businesses and individuals in the final quarter of 2012 dropped by £2.4bn. Lloyds Banking Group reduced its lending by more than £3bn in that time, more than any other bank.
This is after the Funding for Lending scheme was launched in Summer 2012. Dr Vince Cable called the results "deeply disappointing” and said that the scheme may need to be “adapted”. Critics argue that banks are simply taking the cheap money and using it for their own needs. But the aim of this scheme and others like it was not to prop up the banks — it was supposed to kick start the economy.
Meanwhile, apologists for the Funding for Lending scheme say things would have been worse without it and they urge us all to give them more time. But is time running out for small firms that cannot get the funding they need?
The British Bankers Association, representing the major banks, says many businesses are choosing not to borrow. A spokesperson actually said: "It is more of a demand issue than a supply issue.”
Try telling that to Mike Benson and thousands like him. He runs a business in Worcestershire supplying parts for air compressors and exporting to countries such as the US and Chile. The business was described in a BBC article this week as “quietly profitable for the past 15 years” — like many UK small firms that are just getting on with the job.
Mike wanted to borrow £10,000 to put towards the purchase of a new van. Knocked back by the Bank of Scotland, Benson wrote to Sir Mervyn King to tell him of his woes and got a “delightful” letter back that was full of sympathy.
The Governor of the Bank of England did have one piece of advice for Mike — try one of the UK’s new banks such as the Swedish firm, Handlelsbank. It echoes Vince Cable’s comments this week on BBC Radio 4's World at One programme when he said the Funding for Lending scheme is working “with some of the new banks” such as Aldermore.
But the majority of small firms bank with the big names and, according to the Federation of Small Businesses (FSB), a staggering 41% of small firms were refused finance by the high street banks in the second quarter of 2012.
Something’s got to give. We’ll be watching the budget on March 20th with interest. Over to you George.
Rachel Miller is the editor of Marketing Donut.
So you’ve had an incredible new idea and you simply can’t wait to get to work on contacting potential customers, setting up meetings and making your dreams become a reality. But have you made sure you have the right insurance and have a first aid box on site?
It might sound ridiculous, but it’s very often the boring things businesses ignore that kill them in the all-important first year. So here’s a look at three things you might think are dull – but could end up being what breaks you if you choose to ignore them.
Of course, you’ll want to make sure you’re covered if anything goes wrong, right? But did you know that there are certain types of business insurance that are compulsory to anyone who chooses to get a business off the ground? Luckily there are handy online guides that will tell you more, so read up and make sure you’re covered.
No matter how big or small your premises might be, from a spare bedroom to a whole factory floor, a risk assessment could save your skin. It can help you to better protect visitors, clients and staff from accidents. If you don’t carry out a risk assessment, you could find yourself at the centre of a claim that digs so deep into your pocket that there is nothing left to keep your business afloat.
Sure, your risk assessment will help protect you, but it won’t stop accidents from happening. Trips, falls, bumps and much more can unexpectedly crop up anywhere so you’ll need to have either an industrial or office first aid kit available when they do. It may just be a few plasters, bandages and pain killers, but it could make all the difference if it stops someone trying to make a claim against you.
So you’ve done it – you have decided to leave your permanent job, follow your dream and start your own business – great news! But now what?
Starting a business – and keeping one going – can be incredibly challenging in what are still very tough economic times. As an entrepreneur with a clear vision you know exactly where you want your business to go - but it can take a lot to admit that you don’t know how to get it there. This is where many small and medium businesses come unstuck. Where can you find the expertise you need at a price you can afford? To solve this problem, many small businesses are turning to interim managers.
No longer just the preserve of large multinationals or global conglomerates, an interim manager is a flexible, affordable way of getting the knowledge and insight you need to guide your business in the right direction. Whether it is help with sales and marketing, assistance with finance and regulatory matters or day-to-day operational and HR advice, using an interim manager is a quick and easy way to obtain the skills you need.
The other key advantage is that interims operate as a controlled, daily cost – essential for smaller organisations. With no sickness, holiday, pension or other traditional benefits to pay for, it is very easy for SMEs to forecast how much an interim will cost over a specified period of time, with no hidden extras.
If you do choose to hire this sort of resource, small-business owners must also be prepared for the fact that the interim will more than likely be over-qualified for the role they are doing. Don’t be intimidated by this; their breadth of experience means they can deliver for your business faster and leave you with a sustainable best practice approach to grow your business successfully.
This post was written by Nigel Peters on behalf of Alium Partners – global provider of interim management solutions.
All entrepreneurs are self-reliant. I know – I’m a serial offender! But almost everyone who starts a company cannot make much of it without support from a whole range of people – both in the company itself and outside.
These people are always chosen to be the best, most reliable, the most trustworthy. So how does it come about that dynamic self-starters with handpicked teams frequently not only make mistakes, but costly wrong decisions too?
Part of the explanation comes from our personality profiles. The kind of people we are not only affects how successful we are with the outside world (customers, suppliers, the authorities and so on). It also impacts on relationships and effectiveness within the company itself. In my book, Decide – Better ways of making better decisions, I have included advice from acknowledged experts and a guide to the main personality types, and how you can cope with difference and similarity – and importantly pick successful teams.
But decision-making is not a straightforward process, and so-called Decision Traps lie in wait for the unwary. Below I list some of the most lethal. You may well be able to identify examples from your own experience.
The decision-maker is so excited about a potentially exciting outcome (the upside) that he/she seriously underestimates how bad the downside could be if everything goes wrong. Most of us are optimists and it’s natural to be enthusiastic. But wise decision-makers always weigh up reward and risk, and it’s often sensible to turn down an option (however glittering) if the downside could be disastrous enough to break you.
A group of really bright people cannot believe they can ALL be wrong! But it can happen – particularly if the balance of personalities in the room is skewed on the positive side. Ten people are as capable of being wrong as one. There is a related trap called ‘Confirming Evidence’ – when we are prejudiced in favour of people who think like we do. The trick is to make sure it is always someone’s job to be the devil’s advocate, and ensure frequent reality checks.
Sometimes it is tempting to go ahead and make a decision even before we have all the data we need. And it can be fatal to press the button before you have all the necessary information and research. But this is where judgement comes in. It can be almost equally wasteful to insist on having more and more information to the point that the opportunity has been lost. That is ‘information overload’.
This is a polite term for a hasty decision that can come back to bite you. Governments and ministers do it all the time. We are all inclined to kid ourselves we have thought things through when we haven’t.
Really bad this one – making the same mistake again and again.
David Wethey is author of Decide – Better ways of making better decisions, published by Kogan Page.
There is no shortage of start-up business advice out there that is anti-travel. We’re told to work online and use technology to bridge all kinds of gaps in our operation.
While this is sound advice for keeping costs down, there are still limits to what many businesses can achieve without travelling anywhere. If you cannot travel, you may be unable to deliver your product or meet your customers and suppliers, to build relationships and grow.
Transport is an inevitable expense for many businesses, but if you want or need to use a vehicle (or vehicles), you’re going to have to spend a lot of money up front, and factor in the depreciation of the asset into your ongoing operation.
This inevitably involves compromise: you’ll opt for the cheapest van you can run or scale back your aspirations elsewhere to afford a nicer car.
Getting a loan to pay for your vehicle is risky. You might stand to lose more than the car if you fail in your repayments. Unless your business has the cash in its account, you may be looking at dealer finance, and paying absurd total repayable amounts in the long term, with a large deposit and monthly payment in the short term. Thankfully, there is an alternative.
Vehicle leasing allows you to pay only for the years you use. Take out a two, three or four-year lease on a brand new vehicle and you’ll pay a low deposit with low monthly payments to follow. You might even get road tax and breakdown recovery as part of the package. Lower monthly costs will obviously appeal to start-ups, allowing them to afford to run new vehicles that take up less space on the balance sheet – vehicles that cost less in terms of liability and risk.
Leasing does mean that you won’t own the car or van that you drive, of course, but many businesses may find that this is a positive. Leasing companies are left to worry about the vehicle’s depreciation, so it never becomes a factor in the valuation of your business. You can even opt for plans that give you the option of purchasing the vehicle at the end of your lease period. Otherwise, as a more mature business you will be free to continue saving with leasing, or to purchase a new vehicle outright, if that fits your financial plan.
Stephanie Wood of Nationwide Vehicle Contracts
When presenting to an audience, first impressions count. If you lose their attention in the first five minutes, you’ll lose it forever.
It’s human nature for us to judge a person based on their behaviour. In fact, it’s impossible not to form an opinion. People make up their minds within five seconds of hearing or seeing someone – whether or not they care about what is being said.
You will often hear advice on how you should dress to impress and control your posture so you appear assertive and approachable. While these are true, what comes out of your mouth in the first five seconds of presenting is crucial if you are to make a good first impression. It largely determines whether you will achieve the outcome you want. For example, if your goal is to educate, sell, entertain or influence your audience, your opening line must not only grab their attention but also go hand-in-hand with what you want to convey overall.
When planning for a presentation, you should carefully consider your opening line. The purpose of the first five seconds is to captivate. This means anything your audience was thinking or feeling before you started – whether it was based on how you dressed or walked onto the stage – has now been forgotten and they want to hear and see more of you.
Here are five ways to captivate your audience in the first five seconds:
Shock your audience by making a very provocative statement. Everyone loves a bit of controversy, so what better way to see people’s reactions.
Example: “Your competitors care more about your customers than you do. They are watching your every move. If you don’t communicate with your customers enough, they will quickly lose interest and your competitor will snap them up.”
Bring a fascinating or ambiguous object that links to your talk and show it without explaining what it is until the end.
Example: If you are giving a presentation on financial performance, show a picture of three different people, someone positively in the media, someone neutral and someone really being nailed by the press, continue to hold it through your speech. At the end, ask them to reveal the connection with the numbers – they will always remember it.
Share a cliffhanger opening. The key is to set the scene for your audience, so that they can create their own picture in their heads.
Example: “Who the hell do you think you are to talk to me about developing my people?” Pause for five seconds. “These were the first words I heard when I met with…”
Solicit a compelling question. Everyone loves to talk about themselves at a networking event and the same is true during a presentation. Ask a question in the first five seconds and, if it’s a good one, they’ll continue to ponder a response beyond the end of your presentation.
Example: “So what if you fail? Who will care and what are the consequences anyway?”
We often switch off when we see a presenter walk on the stage and head straight into “Hello, I’m Mark and today I’ll talk to you about goal-setting”. Instead, before you even introduce yourself, surprise your audience with something delightful that they wouldn’t expect.
Example: As you begin presenting, remove more items of clothing than is usual. Take off your jumper (to reveal a RELAX t-shirt) and slip off your shoes (and socks if you dare!). Now, as if it’s nothing, begin your talk.
Barry Holmes of Zoom Creates is a regular keynote speaker on the theory and application of accelerated learning as well as a personal business coach to directors, CEOs and business leaders. He has worked with large international organisations including 3, Starbucks, Marks & Spencer, BP, British Airways, Virgin Holidays and Sapient.
Read information on the Marketing Donut about making sales presentations.