The economy: unlocking the potential of SMEs - Business Works
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The economy: unlocking the potential of SMEs

by Steve Pateman, Head of UK Banking, Santander UK
Steve Pateman, Head of UK Banking, Santander UK
The private sector must do more to help strong, smaller British businesses to develop or accelerate their plans for growth if the UK is to achieve a sustainable economic recovery, says Steve Pateman, Head of UK Banking at Santander UK based on a new report published by Dods and sponsored by Santander.

"While conditions still feel tough for many businesses, I am hearing renewed confidence from our customers that Britainís economic recovery is underway," says Steve. "Whether or not this improvement is sustainable will depend in no small part on the reaction of the countryís SMEs, which make up such a significant part of Britainís business and economic landscape. Those smaller businesses that are fundamentally strong and have the ability to grow are of crucial importance to the economic recovery. This research project puts the focus on this cohort of businesses to ask what needs to be done to help unlock this potential and encourage these businesses to act and go for growth now. If this potential can be realised, these businesses will prosper and, in so doing, create jobs and wealth and maintain the momentum of the recovery."

The report, Growth Britain: Unlocking the potential of our SMEs, highlights that the banks and other private sector institutions need to support small businesses in five key areas:

  • encouraging exports;
  • access to the appropriate kind of finance;
  • the guidance and support available in the market;
  • access to the right skills; and
  • the tax and regulatory environment.
This follows a five-month research project which brought together the views of SMEs from across the country with those of policymakers from the three main national parties.

Among the key recommendations in the report are for banks to do more to raise awareness of, and increase confidence in, the sources of alternative finance that exist in the market; and for the private sector to do more to help SMEs reach new export markets.

"While Government interventions in the SME sector are generally to be welcome, this report puts the emphasis back onto the private sector to find market-based solutions."

far from a lack of support, is there too much?

Around £50m has been spent on start-up loans for entrepreneurs who would not normally be able to access traditional forms of finance through the Government-funded Start Up Loans Company. But with so many schemes in place Ė the report estimates more than 285 central government schemes and over 1800 local government schemes available to SMEs Ė how aware are businesses of the support available? Far from a lack of support, is there too much?

"We understand the importance of using our networks and our knowledge to help customers realise their business ambition. Whether this is by using our knowledge of emerging markets to help customers make the first steps to exporting, or whether it is using our local networks to refer a business on to an alternative finance provider, this is exactly the kind of support which the SME market needs to flourish."

"I am particularly interested in this reportís recommendations on how to get SMEs exporting. Our research found that the difference in performance and confidence of exporting SMEs compared to domestically focussed businesses was stark. In our survey, 92% of SMEs that exported were confident that their business would grow in the year ahead," continues Steve.

The report offers a holistic way to boost small business and the UK economy, including how Government can make the procurement process more applicable to smaller firms.

A regulatory environment that does not add any extra barriers to SMEs that wish to export their products overseas. A tax and regulatory system that incentivises alternative finance for businesses and investors. Alternative finance solutions that exist in the market and private sector solutions to the skills gap.

The report also makes recommendations for actions the Government can take to remove some of the barriers which might be holding back SME growth potential. These include ensuring trade services are permitted inside the ring-fence under the Banking Reform Bill; simplifying the tax system for SMEs; and examining further ways to make the procurement process more applicable to smaller firms, including means of reducing the cost of compliance.

You can find a full copy of the report here: Growth Britain: Unlocking the potential of our SMEs

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