Small Talk: Small businesses unimpressed by government help

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The Independent Online

The economic picture remains changeable. Public sector spending is facing the axe, and the Government is banking on the private sector to drive the economy forward. But is it doing enough to aid the small and medium-sized enterprises that are key to private sector strength? If the results of a new survey of more than 1,500 SMEs are anything to go by, the answer is an emphatic no.

Less than a quarter of the UK business owners surveyed for the latest International Business Index, complied by the software group Sage, thought the Government was doing enough to provide support and advice for those starting a business. Worse still, only 14 per cent thought the Government's information and advice was something they would count on.

Indeed, the lack of credibility is such that 46 per cent of respondents said they had resorted to doing their own leg-work and relied on the internet for business information and advice. The Government also wins little credit when it comes to bureaucracy and legislation, something on which nearly 60 per cent expressed an unfavourable view.

Elsewhere, 40 per cent were unimpressed when it came to the ease of access to capital and funding in the UK; when Sage questioned SMEs in other countries, including Canada, the comparable figure was almost half that for UK companies, with only 21 per cent expressing a negative view. One UK small business quoted in the report summed up the challenges, saying: "Small business in the UK is strangled by the banks' refusal to lend under government guarantee schemes and the Government's total ignorance of life outside Westminster."

The UK sample was broad, in that 40 per cent of those questioned were either owners or senior executives at small businesses, while 43 per cent were accountants or payroll administrators.

Looking ahead, 19 per cent of British respondents said funding or lack of access to capital was likely to be their biggest business challenge. Half of those surveyed pointed to rising costs, something which chimes with recent data confirming higher inflation.

The picture was better in France, where around 30 per cent of SMEs questioned highlighted the challenge, but the overall results show that, internationally, 43 per cent of small businesses are worried about rising costs. Maintaining and increasing revenues was seen as the biggest overall challenge, perhaps because of the still uncertain macroeconomic picture around the world.

Unsurprisingly, then, when probed further on their plans for the next 12 months, 55 per cent of SMEs in the UK said they planned to keep a close eye on finances. Only 11 per cent said they plannedto invest in training, while more than half said they were looking to cut expenditure.

The economic picture is nowhere more grim than when it comes to unemployment. The jobless rate remains high – and, judging by the results of the Sage survey, it is unlikely to change much over the coming year. In fact, while 14 per cent of SMEs in the UK said they planned to recruit, 16 per cent warned that they planned to cut back on staff or put off bringing on new hands.

By contrast, 26 per cent of German SMEs said they planned to bring in new employees, while the figure for France was 23 per cent. The only country that fared worse than the UK was the US, where only 13 per cent said they planned to hire new staff and 17 per cent said they were looking to reduce or delay hiring new employees.

The challenges are reflected in SME confidence. In the UK, 34 per cent said that, compared with last year, they were feeling more confident about their prospects over the coming 12 months, but a higher number – 37 per cent – said they felt no different.

Nearly 30 per cent felt less confident, meaning that there were more pessimists in the UK than in Germany, France, Canada or the US. Only in Spain, which is battling to avoid a sovereign debt crisis, were confidence levels worse. Germany stood well ahead of the pack, with more than half of respondents saying they were more confident about the year ahead, compared with just 12 per cent in Spain.

The results were similar when it came to views on the broader economy. In Spain, 47 per cent felt their economy was declining significantly, compared with just 6 per cent for Germany. In the UK, around 8 per cent saw significant decline, while 43 per cent said they saw a slight recovery. Only a per cent saw a significant recovery in the economy right now.

Phoning a friend to solve IT woes

We've all dealt with IT issues. There are times when your computer simply gives up, and you need to call for help. Often, the glitch proves little more than irritating. But for a small business, it could mean not being able to send that all-important email or stopping work altogether for a crucial few hours.

The problem is that hiring a full time IT support staff can be beyond reach for many. And an increasing number of small and medium sized enterprises are looking towards their friends, not just to solve glitches, but also to seek advice on IT purchases, according to new research from PC World Business.

The survey reveals that more than 1.3 million SMEs opted to phone a friend when faced with an IT issue in the past 12 months. Worryingly, however, it turns out that almost half – 44 per cent – ended up with a whole load of new problems as a result. "Phoning a friend used to be a lifeline," Phil Birbeck, the managing director of PC World Business, said. "But when it comes to getting IT procurement advice and solving IT issues, your best friend could become your [firm's] worst enemy."

The trend is being driven by a lack of funds to hire professional help or, in some cases, by a belief among small businessmen and women that their company is too small to justify the cost of proper IT support services, with some 38 per cent of those surveyed citing such reasons for calling in their mates.

Around 14 per cent said it was simply more convenient to call friends when stuck in a jam.

All this is hitting productivity; so much so that the vast majority of those surveyed – 75 per cent – are losing two hours of their precious time a week because of IT problems. Predictably, these issues are also weighing on opportunities and coming in the way of new business wins, with 17 per cent saying that they had lost a customer or, in some instances, failed to win new business as a result.

For those looking to sidestep these problems, PC World Business recently piloted a free training programme to help SMEs and their friends brush up on their IT skills and pick up some tips on buying the right kit for the job.

The workshops were held at PC World stores in Bristol and North Shields. If you missed out, more are being planned for the future.