Scots small businesses 'set to survive global meltdown'

Published on Wednesday 23 January 2008 20:53

SCOTLAND'S small businesses will be the last to be affected by the fallout from the global economic uncertainty. Large financial company cutbacks and bonus plunges will take time to trickle through to the SME market.

This is the view of Steve Pateman, chief executive of NatWest and RBS business banking. Speaking exclusively to The Scotsman, Pateman said he believed that, if financial institutions cut bonuses, then there is a delay in impacting on the smaller businesses reliant on this spend.

He said: "If you were to ask small businesses how the outlook was for 2008 today, you would get a different set of answers from three months ago. This is not because of a downturn they are feeling, but more from the newspaper and television coverage."

Pateman said his clients, which cover a 36 per cent market share in Scotland and 28 per cent across the UK, are more concerned about cash flows than economic downturns. He explained: "I think a lot will depend on how the consumer reacts to world events. Generally, small businesses are shops, pubs, marketing firms and restaurants. We don't make many things but I have managed Scottish businesses for the last five years and I firmly believe they are more resilient."

He argues Scottish small businesses have a loyalty and community factor that is not as evident throughout the UK.

"In Scotland, they are more passionate and seem to support each other more. There is a sense of community and you find local businesses want to work with fellow local businesses," he said.

Despite media coverage from business organisations such as the Chambers of Commerce and the Federation of Small Business on the impact of capital gains tax and red tape, Pateman says in his experience the main concern remains cash flow.

He also observed that the small-business sector is made up of clients who just want to run their own businesses.

"It is not made up of guys trying to get rich through things like the Dragons' Den. It is not a golden goose. Most entrepreneurs do it because they want to create something for their kids or a pension pot. We have not battened down waiting for an avalanche of firms being unsuccessful," said Pateman.

He argues a return to old-fashioned "Captain Mainwaring" style banking could prove beneficial, allowing bankers to use their commonsense on financing decisons.