Author: Guy Thomas “Moaners” who “lived in unrealistic Disneyland”. In typical headline-grabbing style, Alan Sugar, Lord of the Fired, Business Guru and government Enterprise Champion, was recently reported in The Times laying into owners of small businesses who have been blaming banks for their difficulties. It is unsurprising that his comments, made when speaking to a delegation of 300 small and medium business owners in Manchester, have come under fire from the Federation of Small Businesses, Politicians and  business owners themselves. It’s too early to tell if this “kick up the backside” style of motivation has had an effect on how these firms will approach their banks in the future, or how owners of small businesses will feel about Alan Sugar’s comments, but I can tell you that it is not a balanced view of the situation. It can be argued that Sugar is simply out of touch with the SME market . Through our involvement with a variety of business clinics, we see many viable small businesses befuddled by lending practices and unclear on the right formats and accounting information that the banks require. In this climate it should be a priority of the banks and the government to educate small business borrowers in the mechanics and realities of business loans and what funding options are available. Business Link plays a very positive part in meeting this need for education, as do some banks, but more can and should be done to encourage small business borrowers to be both smarter and more effective advocates for their businesses. Of course, there will always be firms that are too high risk to be safely lent to, and it would of course be irresponsible of the banks to do so. But there is a large number of the small businesses and start ups that we encounter and advise that are run by passionate, driven and motivated individuals, who have, for the most part, sound business plans and a solid offering. Many of  the businesses we are seeing aren’t going to their banks in need of a ‘life-raft’ or because they are bust or have mis-managed their business. They are going to the banks for financial support to fulfil orders, for a quick injection of cash that will allow them to eventually grow their businesses and are on balance a good long term investment. Alan Sugar also comments “I hate the use of this word cashflow in the sense in that it is a business problem”. What he is perhaps failing to understand is that “cashflow” in this economy is a business problem originated by issues in the supply chain and customer network, opposed to financial miss management. We are advising our clients to deal with these issue in their supply chain and customer network head-on, by making sure they have contracts in place and that they are enforceable. We are also advocating that our client be “customer careful” and  really get to know their customer base. But not simply as a way of strengthening their relationship or for business development but as part of their risk management strategy. By gaining a clear understanding of which organisations your customers supply and are dealing with allows you to expose potential areas of danger in your wider network. So would many of these “moaners” be better off in insolvency as Sugar a ledges? Well, insolvency is, and always should be the last resort. We have a large SME client-base, and have seen more recently an increase in insolvent businesses and even more “tittering on the brink”. The key to avoiding insolvency is to take action immediately, as soon as you feel their might be a problem. By working together with your Accountant and your Lawyer there are usually reasonable alternatives to simply “going bust” . No doubt Lord Sugar intended his comments to motivate as well as admonish, it’s just a shame he has chosen, on this occasion, not to act as more of an advocate for small businesses, after all the SME account for 99.9% of all enterprise in the UK.

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Small Business in ‘Disneyland’…

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