Follow Scotland’s example on enterprise, urges FPB
11 April 2008  
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The FPB is urging the UK Government to follow Scotland's lead on small businesses, following new research which suggests it has bucked the trend south of the border by marking a fall in the number of firms going bust.

According to data provider Equifax's latest Business Failures Report, there was a 23.8% fall in the number of businesses which failed in Scotland during the first quarter of 2008, compared to the same period in 2007. However, the total number of firms failing across the rest of the UK went up by 9.1%. The worst affected region was the North West, with an increase of 21.4%.

The report follows a survey of politicians, carried out by research agency ComRes in conjunction with the Industry and Parliament Trust (IPT), which investigated the business experience of members of the UK and Scottish Parliaments, the Welsh and Northern Ireland Assemblies and the European Parliament.

It found that just 9% of politicians have more than 10 years of business experience, with only 13% having experienced even five years in business. The figures for Scotland were 9% and 7% respectively, but Jim Gorie, the FPB's spokesperson for Scotland, said that some key differences had allowed businesses there to flourish.

"To a considerable extent, the Scottish Parliament bucks the trend. The leaders of all the four major parties all have business experience and the present SNP Enterprise Minister was formerly a highly successful entrepreneur in the computer business," he said. "Safeguarding the future survival of small businesses in Scotland will not be linked to high flying political economic theory, but nitty gritty support at constituency level."

The same is true across the UK, provided politicians can convince their constituents that what they lack in experience they make up for in their commitment to small businesses. The FPB's business-friendly MP/MEP award aims to support those MPs and MEPs who, contrary to the research, regularly campaign on behalf of small firms, many of which are beginning to feel the effects of the ongoing credit crisis in Scotland and elsewhere.

Mr Gorie added: "The challenge facing politicians in the rarified atmosphere of Holyrood is how they will cope with tighter budgets and the trickle down negative effect of the credit crunch on small businesses."

Equifax's report show that the transport and communications industry has been hit hardest, with a 16.3% increase in the number of businesses in that sector failing. Increases in the other industry sectors were: construction (11%), retail (9.1%), services (8.3%), wholesale (4.3%). Conversely, manufacturing saw a 2.8% fall in failing businesses.

"Banks are going to look at businesses just as closely as they are looking at individuals, making it harder for firms to get funding to pay off debts and bolster their cash flow," said Equifax's External Affairs Director, Neil Munroe. "There are tough times ahead and it is clear that firms need to do more than ever to secure the future of their business and protect themselves from the risk of failure. It only takes one customer going bust to jeopardise a business, but careful monitoring today can reduce the threat of bad debt tomorrow."
 
Given the additional problems small firms have experienced with issues such as late payment, it is essential they take steps to better protect themselves. The FPB offers a solution to the shortage of available credit through its partnership with Cattles Invoice Finance, which allows businesses to access up to 85% of the value of an invoice within 24 hours of it being raised, guarding against late payment and saving firms an average of £3,000 in the first year of use.

For more information about the FPB's range of money-saving products and services, and to find out how, despite the credit crunch, businesses can survive and grow, visit www.fpb.org. The deadline for nominations for the FPB's business-friendly MP/MEP award, which takes place in Westminster on Wednesday, 14 May, is 25 April.

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