James Ashton: Some small businesses want to stay that way

Getting an accurate idea of what is going on in the nation's small businesses isn't easy.

The perception is they are on their knees; bound up in red tape and lacking confidence to take risks, especially after this week's retreat back into recession. Above all, they are struggling because those nasty banks won't lend enough so they have sufficient headroom to trade.

The bankers I met this week were at pains to rebalance the picture. The customers they see are getting by despite anaemic economic growth. They have cash, but don't want to spend it. If anything, there is evidence that bosses of small firms are becoming more cautious by locking up their spare money for the longer term in accounts that bear a greater interest rate.

Royal Bank of Scotland says that the small and medium-sized enterprises (SMEs) that bank with it in Britain have £30bn in unused overdraft facilities available. Plenty of headroom to get on with doing business. Over the road at Barclays, of the business loan applications it receives, 80 per cent are approved on a pretty consistent basis.

Now of course there are gaps where firms aren't being catered for. Banks – and not just Barclays – have plenty to do to work on their corporate image which still lags that of the branch relationship manager. Everyone in the City knows an entrepreneur with a banking horror story.

Getting it right supports the hope that some of today's 4.8 million small businesses will be the large companies of tomorrow.

However, the truth is that very few corporate oaks grow from entrepreneurial acorns. That is partly because of the failure rate and partly because those that become successes sell out when they reach a certain size. There is another reason, though. Many bosses of small firms have no desire to get bigger.

For them, running a business is a lifestyle choice. Leave aside the fact that recruiting new staff is expensive and time consuming. It also takes a self-employed boss away from the golf course or their children.

Far from saving the economy, the message to the banks from them might just be: leave us alone.

j.ashton@independent.co.uk

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?