Small Talk: Mentoring is vital to new wave of start-ups

 

Will George Osborne's Youth Investment Fund encourage a new generation of young entrepreneurs to start their own businesses? It just might, say those who work with young business leaders – but not if money is the only thing on offer.

The Chancellor's Budget last week promised £10m for the fund, a pilot scheme on which the Department of Business will consult over the next few weeks. The aim is a scheme offering small low-interest "enterprise loans", in the style of tuition fee loans for university students, to young entrepreneurs.

The loans are likely to be for a few thousand pounds, and applicants will have to be able to show their business plans are viable. Beyond that the detail remains unclear: it's not certain what the age limit will be for applicants, for example, or how their requests for finance will be judged. It's not clear either whether the loans will be written off in the event of the business failing.

Still, Ronke Ige, founder and managing director of the natural skin care company Emi & Ben, says the Youth Investment Fund does have a chance of succeeding if there is broader support for young people starting up their own ventures.

Ige launched her business three years ago with a £3,000 start-up loan from the Prince's Trust, the charity that works with young people on all sorts of projects. Now 32, Ige is one of a group of entrepreneurs working on a campaign run by the cable company Virgin Media, which called for enterprise loans ahead of the Budget.

Young people need to be pushed to think about entrepreneurial skills at school, she says, and given support once they get going. "When I go into schools and universities to talk about starting your own business, I get a really enthusiastic response, but it's also obvious that pupils and students have been taught all about working towards jobs and professions – and not about enterprise," she says.

Ige also says her business's success is partly a result of the mentoring support offered as part of her relationship with Virgin Media. She has worked closely with Wilfred Emmanuel-Jones, founder of The Black Farmer food range, and rethought her business plan following discussions with her mentor.

"Mentoring is so important to new businesses, whatever the age of the founder," she says. "If you get the right mentor, someone who has experienced similar challenges to those faced by your business, they can just be the most fantastic sounding board."

Much will depend on which agency runs the pilot scheme and how much freedom they are given to make it work. Part of the Department of Business's consultation is an invitation to independent organisations such as the Prince's Trust to bid to run the scheme. Some of these organisations already offer similar initiatives to particular groups, often those with disadvantaged backgrounds, and are well-placed to offer training, support and mentoring, rather than simply approving the loans.

A rare safe haven in volatile drugs sector

The pharmaceutical sector is full of small companies that promise to shine brightly only to fade on disappointing trial results for their would-be blockbuster drug. But Alternative Investment Market-listed Cyprotex doesn't face quite the same risk: rather than looking for blockbusters itself, it works on other people's, testing new drugs before they reach clinical trial stage.

It's a much safer sector of the pharma market – and an increasingly profitable one. Cyprotex made a £590,000 pre-tax profit last year, its fourth consecutive year of profitability and growth.

Singer Capital, house broker, has set a 12p price target for the stock, currently at 5p.

Quiet year on Aim is threat to brokers

Will 2012 turn out to be the quietest year for the Alternative Investment Market? There were just four admissions during January and February, and a record low in funds raised. Though the pace has picked up this month, Aim is on target to do even less business this year than in 2009, its worst year. That's bad news for the broking industry. Many brokers are going to the wall and consolidation is rife. Next on the block could be Panmure Gordon, which last week sold its loss-making US subsidiary ThinkEquity. Some are worried that the pressures on brokers, which generate much of the research on smaller companies, are now damaging the market.

A green way to deal securely with waste paper

Small Business Man of the Week: Richard Costin, managing director, Banner Business Services

We really got started in our current business in 2010 when we were working with HM Revenue & Customs: after the lost computer disc scandal, it wanted to take much greater control over the disposal of sensitive information, and we were able to offer a recycling process for its paper.

"We use something called a 'closed loop' system: we collect each office's waste paper, destroy it securely, segregate it at the mill, pulp it and return it as 100 per cent recycled copier paper – we can repeat the process several times and audit it – so proving that the office is using the same paper over and over again.

"It's a very green system: if you give me 100,000 tonnes of paper to recycle, I'll give you 80,000 tonnes back and the waste can be used as a fuel to power the plant – and though there are now no suitable paper mills in Britain, we use the same vehicles to transport the used paper to the facility we use in Germany and to bring the finished product back."

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