To: Mr Paul Scully MP, Minister of Small Business
5th October 2020
Re: Intuit Quickbooks Small business roundtable
Firstly let me thank you for taking the time to attend the Round table event at today’s conference, i know how busy your diary is and appreciate the opportunity to provide feedback and concerns regarding the challenges that small businesses continue to face.
I wanted to write to you summarizing the points I highlighted in the session and some that I was unable to raise due to the limited time we had.
- Business lending
Small businesses have always found sourcing funding difficult due to being new or not very profitable and being seen as high risk by the lending institutions but this difficulty has now become an impossibility due to lenders becoming overly risk averse.
You mentioned in your opening remarks that “pivoting” is the key to small business success and i entirely agree with you on this but small businesses are struggling to pivot where finance is required for new equipment etc. They have often utilised the Bounce Back Loan already to survive the first few months of Covid 19 trading conditions and now can’t find any further funding. We believe it would be helpful to allow viable small businesses to have a loan top up tied to a business plan proposing how the funds would be utilised to pivot.
Further challenges for small businesses are in the form of large companies reducing credit limits or in many cases insisting on payment before or on delivery of goods due to concerns over risk of unpaid bills. We have had several examples of this we can provide as evidence and we would appreciate this being looked at and taken into consideration in the same discussions that you are having regarding big businesses delaying paying small businesses in fair time frames.
The sudden removal of credit lines by suppliers is crippling to small businesses cash flow and has in many cases forced viable businesses to cease trading for periods of time in covid because they could secure the raw materials required to continue trading/
Small businesses in 2018/19 started to really benefit from what are known as Challenger banks such as Starling, Monzo and Tide. These banks brought a fresh change to small businesses allowing businesses to be established at companies house and have a bank account to start trading with in less than a 48 hour period which compared to the weeks that high street banks often took along with the reduced costs accelerated business formations and growth.
Unfortunately since Covid 19 took hold both the high street and challenger banks have in most cases stopped opening business bank accounts for either sole traders, limited companies or in some cases both most citing risk of BBL fraud meaning they aren’t supporting new business accounts.
In times of economical struggle we know we will see a spike in new business formations and this is being damaged by new startups failing to open a bank account through no fault of their own. In the last two weeks I have spoken with five new start businesses struggling to get started because they can’t open a bank account.
Any pressure and influence you can bring to bear on banks to start accepting new applications for business accounts to help both the start ups and the economy would be greatly appreciated.
- Growth Hubs/Business support centres
In your opening remarks you mentioned the great support available from what in England are known as Growth Hubs and in Scotland is under the banner of Business Gateway. Specialising in supporting small businesses gives us an insight into the views of small businesses of the Growth hubs and Business Gateway. Unfortunately the feedback isn’t great, especially regarding the Scottish Business Gateway. In Scotland the facilitation is down to local councils and often contract the facilitation out to the lowest bidder creating a poor starting point. The main concern however is the people employed by the hubs to deliver training and support have often never run their own business and struggle to relate and understand the challenges of business owners.
As a former business owner yourself I’m sure you agree there’s some things that can’t be taught in training sessions to employees experiences etc that only business owners understand, relate to and can support other business owners in.
I believe that business hubs customer facing services should be delivered by experienced business owners to provide a deeper level of support for the new business owners utilising the support of the much needed services that Hubs are designed to provide. I appreciate the Business Gateway situation is devolved to the Scottish parliament and i will be writing to the appropriate minister in the Scottish parliament regarding this aspect but supporting clients across the UK we know its a struggle that business owners face regardless of their location.
Again I would like to thank you for the opportunity to provide feedback on small businesses and their current position and for the support you have helped to deliver to date. If you would like to discuss any of the above points in greater detail I would be happy to meet with you in a format suitable to us both.
I look forward to your response.
Johann Goree CMgr FCMI MIAB