TURNAROUND OF SMALL AND MEDIUM SIZED ENTERPRISES

Transcription

1 TURNAROUND OF SMALL AND MEDIUM SIZED ENTERPRISES

2 Definition of a Small and Medium Sized Enterprise (SME) Turnover Not more than Balance Sheet Not more than Employees Not more than Small 6.5 million 3.26 million 50 Medium 25.9 million 12.9 million 250 2

3 At the start of 2008, the 4.8 million UK private sector enterprises employed an estimated 23.1 million people, and had an estimated combined annual turnover of 3,000 billion. Number of enterprises, employment and turnover by number of employees, UK private sector, start of 2008 Number Enterprises Employment ( / 1,000) Turnover ( / million) All enterprises All employers 4,783,280 1,237,560 23,128 19,239 2,994,978 2,763,280 With no employees or more 3,545,720 1,032, ,055 26,710 6,020 3,888 3,857 3,332 2,665 9, , , , ,450 1,494,152 3

4 Almost all of these enterprises (99.3 per cent) were small (0 to 49 employees). Only 27,000 (0.6 per cent) were medium-sized (50 to 249 employees) and 6,000 (0.1 per cent) were large (250 or more employees) Small and medium-sized enterprises together accounted for more than half of the employment (59.4 per cent) and turnover (50.1 per cent) in the UK Small enterprises alone (0-49 employees) accounted for 47.9 per cent of employment and 36.5 per cent of turnover. 4

5 As I emphasised in my recent speech in Liverpool, and on many previous occasions, there is a special concern about the ability of SMEs to obtain credit. That is because SMEs, unlike larger companies, are constrained to borrow through the banking system which is at present under considerable stress. My conversations with businesses in all parts of the United Kingdom have reinforced this concern. Extract from letter from the Governor of the Bank of England to the Chancellor dated 29 November

6 SMEs have been heralded as the lifeblood of the British economy, the driving force that will lead us out of recession. So are we doing enough to help them? The Government has so far offered: The National Guarantee Loan Scheme will provide a cash injection of 20 billion in the coming months, which will be made available to businesses with a turnover of less than 50 million. 40 million will be channelled through the banks in the form of business loans. Credit lending facilities will also expand which could cut borrowing costs by one per cent. 6

7 The Rate Relief Holiday Scheme, which was due to come to an end on 1 October of this year, has been extended for another 6 months. The Government will also give businesses the opportunity to defer 60% of the increase of their business rate bills as a result of the RPI uprating, to be repaid across the following two years. On top of this, regulations are set to be relaxed, particularly in terms of health and safety which means SMEs will have fewer hoops to jump through. The expected January fuel price increase has also been dropped. 7

8 Investment is being encouraged too, from April 2012 anyone investing up to 100,000 in new start-up businesses will be eligible for 50% income tax relief and any tax on capital gains invested will be waived Is this enough? 8

9 We don t think so. SMEs need more hand holding and assistance to steer them through their current difficulties, help them plan the route out of recession, and give them access to funding. We want to offer SMEs the same type of turnaround service that is available to larger enterprises. 9

10 PRODUCT The Services Offering Performance review Development of recovery strategy Implementation Performance improvement Specialist solutions 10

11 Funding We should be able to introduce either directly or via brokers the following sorts of funding, as appropriate: Finance from banks Private monies Asset based finance Invoice discounting and factoring Equity 11

12 Conclusion We believe there is and will continue to be a significant demand from SMEs for this type of service over the next two years as, the European Union allowing, we emerge from the current difficulties. 12