Bill Jamieson: Support for small businesses is a big concern

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MID-WAY through one of the busiest periods for small business events and networking, and some major and all-too-familiar issues have bubbled to the fore.

An important and well-attended event was held by Scottish Business in the Community (SBC) in Edinburgh last week. It was introduced by Jane Wood, SBC chief executive, with key speakers including Frank Blin, the current Prince’s Ambassador for Scotland, John Mason, the Scottish Government’s director for business, and Elaine Robertson of the Scottish Qualifications Authority. The sell-out conference was held in the stunning atmosphere of The Caves, just off the Cowgate – itself a small business exemplar brought into being by SBC member Lisa Rowan-Harney.

The key themes of the event were to help small firms to work with community organisations and grow their businesses through collaborative working.

Help with staff recruitment emerged as a big theme. But biggest of all was procurement – and a clear sense that, for all the supportive rhetoric from government and public agency speakers, small businesses felt that the tendering process for public sector work is loaded against them.

Elaine Robertson talked of the tightrope walk between the statutory obligations of the procurement process and helping small firms through application and form-filling. Some suspected that lack of “social inclusion” credentials was often used as an excuse for disqualifying SMEs. Others felt small firms were perfectly well qualified in terms of their employment and environmental practices but could be encouraged to project these qualities when tendering.

John Mason set out the Scottish Government’s support for business including the Small Business Bonus Scheme, help for Entrepreneurial Spark, extra loan support for the Prince’s Trust and apprenticeship programme support. To this tour d’horizon he added a new one-stop-shop providing advice on finance for small business start-ups and expansion, bringing together banks and public agencies.

Last week also saw a packed East of Scotland Federation of Small Businesses annual dinner at the Caledonian Waldorf Astoria, where Alistair Darling was guest speaker. Supported by Edinburgh College, this was one of the best attended such events in years and attracted senior Scottish politicians as well as leading business organisations – signs, perhaps, of growing recognition of the importance of SMEs in boosting economic recovery.

Any doubt over the importance of small business was dispelled with official figures last week showing that the number of private businesses in Scotland has grown to just over 341,000 – the highest since 2000. Despite all the problems and challenges in the economy, the number has increased every year since 2006 and the year to March 2012 saw the largest annual increase – just under 10 per cent – since 2000.

There was one startling figure in particular I gleaned from an excellent SBC summary leaflet: that if every SME took on just one extra member of staff, the unemployment rate in Scotland would fall to zero!

Such an outcome is never going to happen – the universe of small firms is constantly changing with many exits as well as entrances. Many have been started up out of desperation and necessity – people shaken out of full-time employment. A large number of new businesses will prove to be short term and will not the last the course. For many, survival will be a nail-biting struggle. This is one of the reasons I expect that policy focus will shift from encouraging business start-up to helping small firms survive the crises of the early years.

A major hurdle here is taking on the first full-time members of staff. Fledgling businesses thrive in an atmosphere of informality and spontaneity. Sadly, reams of regulation intended to support employment now act as a formidable barrier to young firms taking on staff for fear of attracting “try-it-on” litigation and the predatory attentions of employment rights lawyers.

Just how dangerous a minefield this is has been set out in a guide to the potential legal and financial consequences of hiring casual labour produced by Edinburgh-based lawyers Murray Beith Employment.

SMEs, the lawyers warn, must not operate on the erroneous supposition that they have no legal or employment law obligations to these employees beyond the confines of any verbal or written agreement. The truth is that people might look to take firms to an employment tribunal – at a cost of several thousand pounds – as a result of one aspect or another of employment law. Little wonder small firms are scared of taking on people!

This Wednesday sees the one-day Start-Up conference at the Assembly Rooms in Edinburgh, put together by young Scots entrepreneur Sam Zawadzki who runs the Advance to property service website. It has a range of top-flight speakers and tickets are selling briskly.

Further details are available online at: