Economy Growth and Start Up Confidence

 
Many commentators and business organisations are acknowledging that the UK economy is slowing picking up; given the stagnation over recent years this is good news and we can only hope it is sustained. I suppose the only concern is that it’s not a rebalanced economy that is driving growth but a pick up in consumer spending and a stronger housing market.

If the numbers of business start up enquiries received by BIP is any indication there is a lot of confidence in people starting up. Yes many of these are becoming self employed because they cannot find employment but leaving these aside the numbers of start ups are growing.

There is a lot of support available to prospective entrepreneurs; New Enterprise Allowance for Job Centre Plus customers, a soon to be extended Start up Loan finance package, targeted support for women (and men!) under the Rural Growth network as well as various courses on enterprise and BIP's own support in some areas.

One of the challenges when running a business for the first time is the isolation that some people can suffer particularly when things are not going quite to plan; at times like these you need to talk to someone, it could be a BIP advisor or another business person. We have recently opened the Okehampton Work Hub which can offer people a desk, computer, scanning and printing facilities, free coffee and wi-fi. It also gives you the opportunity to talk to others in business or a BIP advisor. Why not try it, you can have the first session free and after that it’s very reasonably priced.

As a footnote I have just joined Twitter (@StewartHorne3). I am hoping my contribution there will be a little more frequent than my blogs, not sure how it will go but I will give it a try and hopefully won't bore my followers too much!

Stewart Horne

Rural Areas Set for Renaissance?

This might seem a very optimistic statement given the doom and gloom that surrounds the UK and European economies at the moment, but I do believe there are a number of factors that give cause for a positive outlook.

Nationally, there are a number of initiatives that have raised the prospects of rural areas seeing more resources being allocated as government seeks to rebalance the economy. Firstly Defra have just announced the creation of 14 Rural and Farming Networks. These would have direct contact with government, meaning they would be able to directly shape future rural policies. Networks representing different areas of England would identify and feed back local issues and concerns straight to the government, in order to make policies more rural-friendly. They would make a direct link between rural areas and the government, creating new opportunities to develop better and more targeted policy.

Secondly the government is to review the formula that helps decide how much money local authorities receive to provide rural services. The pledge is contained in the government's response to a consultation on proposals enabling councils to keep a share of business rates they collect rather than paying them to Whitehall. Published on Monday (19 December), the response will be seen as a boost for rural local authorities who have long campaigned for a fairer funding deal from central government.

It says the government will consider limited technical adjustments to the relative need formulae used to determine funding for rural services and concessionary travel. For many years there has not been any acknowledgement that it costs more to deliver services in rural areas than it does in urban areas. This review is a chance for rural councils to persuade government that the current situation is unfair.

Thirdly, the government plans to establish six Rural Growth Networks to support countryside businesses and bolster the rural economy. The creation of the networks aims to help rural areas overcome barriers to growth, as outlined in Defra's rural economy growth review. Barriers include a lack of suitable premises and poor provision of infrastructure, such as superfast broadband and mobile networks. The government is investing around £15m in the pilots, including up to £2.3m to support rural enterprises led by women. Rural Growth Networks will typically consist of a small number of sites or 'enterprise hubs' in rural locations.

Locally; Devon and Somerset County Councils have won over £31 million pounds to support the development of Superfast Broadband in the two counties, together with £10 million from the councils this is a huge investment in infrastructure for the rural areas. The focus will be on those areas where BT will be unlikely to invest due to the low number of potential customers. Superfast broadband will allow businesses located in remote areas the capability to compete on equal terms with both UK and overseas competitors. The Local Enterprise Partnerships in the region (Heart of the South West and Cornwall and Isles of Scilly) both have rural growth as one of their key objectives over the next three years. As they become established I am sure they will be pushing government to build on the actions they have already taken.

I don't think I can remember so many different initiatives supporting the growth of rural economies in England at any one time. They are desperately needed as unemployment rises and the cost of getting to work is so high for people living in remote areas. Jobs created in rural areas help in so many ways, they help maintain rural communities, they reduce travel (helping the environment) and they support the well being of local residents. If jobs can be created and sustained then the future for rural areas can be bright.

Stewart Horne

Electronic Chatter or a Real Chat?

I find I now spend some of my spare time on the internet and find forums a good source of information. Usually its farming, enterprise or rugby related; there you know all my interests now!

This got me thinking - have these forms of communication, along with social media sites like Facebook, Twitter and LinkedIn, replaced the chats at market or down the pub? I suspect not quite yet but can foresee the day that they will.

The difficulty in many rural areas of Devon and Cornwall is that access to a decent broadband connection is often difficult and in some places impossible. All that is about to change, Cornwall has already embarked on a super fast broadband programme and the recent announcement of £50 million from BDUK for Devon and Somerset will mean those areas will see dramatic improvements in broadband speeds over the next couple of years.

This will allow people and businesses in the rural areas the chance to compete on equal terms with urban areas and will encourage businesses to locate anywhere they choose. It always amazes me when I talk to people located in the Okehampton Business Centre to find they do almost all of their business “virtually”; whether that’s environmental waste management in Manchester, data management for the Scottish nuclear power industry or the supply of wood fuel nationally. Super fast broadband will undoubtedly improve the area’s economy by increasing the business opportunities, allowing people to work from home (reducing travel to work costs) and being able to market to the world.

Internet forums may well be responsible for huge leaps forward in agricultural practices. At the beginning of the 20th century they would have had no weekly farming magazine, no internet, no television and no radio. They simply had the wisdom and experience of their forefathers handed down through the generations; and had access to the thoughts and ideas of their neighbours at market and social gatherings and drew on their own experiences too. Given very few people like change, preferring to stay in their comfort zone, if a farmer developed a new farming practice 100+ years ago the majority of his neighbours would reject it initially, sticking to what they know. With the Internets instant communications new techniques and methods can be viewed by the world in minutes, if it’s good it will be taken up and if it’s a bad idea it will be dismissed in no time at all.

That’s the positive side, but whilst this will mean most people will be “connected” in a virtual sense, they are becoming increasingly isolated in many rural areas, no more so than in the agricultural community. Trips to market are now rare as direct selling and the distance to the remaining livestock markets increase, very few agricultural supply firms can afford an army of reps driving down farm lanes. Many farmers now also work on their own as they cannot afford employees. This is compounded by most farmers’ wives having to go out to work to support the family income. Further, the closure of village shops, schools, and pubs all limit the opportunities for the odd chat with the local community support network.

For those that find times difficult there are a number of support initiatives, including the Farm Crisis Network, Church Support groups and ARC Addington. They came into their own in 2001 and continue to do fantastic work.

Recently the Commission for Rural Communities have announced they are researching how people in rural areas are socially isolated. The Commission aims to make firm recommendations to the government and other bodies about the services provided to isolated rural people. It’s good to see the issue of isolation is being recognised and the introduction of super fast broadband can go some way to alleviate its effects, but I doubt there’s anything better than a chat over a pint or a cup of tea.

Why not share your thoughts on the subject and visit BIP’s forum and go to the Business Discussion topics.

Enterprise, Enterprise, Enterprise

My colleague, George Derbyshire CEO at the NFEA, has recently made the following observation after a speech from David Cameron. I couldn’t agree more and all the research shows that businesses that get some support in the early months have a much higher survival rate. The department of Business Innovation and Skills have just published a report on what types of support businesses favour - surprise surprise its human contact rather than websites or call centres. The report can be found at www.bis.gov.uk/assets/biscore/enterprise/docs/r/11-507-research-into-business-support-channels

George blogged “Interesting speech from David Cameron this weekend. “Enterprise is not just about markets, it’s about morals. We understand that enterprise is not just an economic good, it’s a social good too.”

Couldn’t agree more. And it’s not just words from the PM. The Government will be “rolling up our sleeves and doing everything possible to make it easier for people to start a business and grow a business.”

So he is embarking on a crusade to cut taxes, regulation and bureaucracy. Indeed he is going to “pull these (bureaucrats) into my office to argue this out myself.” All this is necessary: but it is not sufficient. Mr Cameron talks with pride of the 30000 + new firms started in January this year alone and identifies the Conservative Party with builders, electricians, roofers and retailers.

I am sure these 30000 new businesses will be grateful for every regulation which is scrapped. But that is not going to make the difference between success and failure, or between growth and stagnation. Our new electrician won’t fail because he doesn’t know which wire goes where. It will be because he’s got his pricing wrong, or can’t control his cash flow, or fails to devote enough time to sales and marketing.

So, Prime Minister, take away the obstacles by all means, but if we don’t find a way to provide people with the essential business skills they need to succeed, we will just be setting them up to fail.

And where’s the morality in that?”

To read more blogs from George go to www.nfea.com/blog.html

Solar Power - A Partial Eclipse?

There's an old saying "all that glitters is not gold". Will this be the epitaph for large scale solar farms? The government has recently announced a fast track review of solar feed in tariffs above 50KW.

Few landowners will not have been aware of the large numbers of solar firms cold calling farms looking for suitable sites for solar parks and offering various rents from £500 to (allegedly) £4000 / acre / annum for 25 years. The "gold rush" as its been referred to has obviously been fuelled by the attractive feed in tariffs available which has been sucking in investors looking for a decent return on their money.

The concept of the incentives to create renewable energy can't be argued with but this is an example of a government trying to manipulate a market and (from their perspective) getting it wrong. Lets hope the review doesn't destroy what has the makings of an important industry in the South West with many of 00’s of jobs potentially being created. The thousands of small installations being supported are to be applauded and these must continue to be encouraged. The balance between excessive subsidy and one that stimulates effectively will be a difficult one for the review to gauge but I do believe that the 50kw figure is on the low side, 100kw could be sited on a large roof! Lets not throw the baby out with the bath water!

New Business Starts to Recharge the Economy

With a slow economy and reducing public expenditure, job losses are likely to figure on many news bulletins over the next couple of years. In Okehampton, over 11% of jobs have been lost with the failure of food producer Polestar and the imminent closure of the Wiseman milk plant. This is a major shock to the area and will impact well beyond the initial job losses.

What help can BIP offer to those affected? For existing businesses we have a support project that can offer business advice and training, both aimed at improving the business performance. Often a small change can bring big benefits to the bottom line.

We are already seeing an increase in people contemplating starting their own business as jobs become harder to find. Certainly the government have acknowledged that it’s the private sector and small business that will lead the re-balancing of the economy. To help people decide if self employment is for them and to assist them in developing their business plans, marketing plans and financial forecasts BIP have put together a series of practical workshops - Steps to a Successful Business Start Up.

Take a look at the full content on www.bipwestdevon.biz .

Fuel Price Madness?

The big talking point in my house over the New Year was the ever increasing price of fuel, especially the price of heating oil, the main fuel in rural areas.

The way the price increased from 45p /litre to 70p plus in the space of two weeks in early December defies logic, surely the fuel was in the depot bunkers prior to the cold snap? Today (11th Jan 2011) the price has fallen to 55p/litre which to my simple mind confirms that some suppliers took advantage of the situation.

Added to this is the ever increasing price of road fuel, caused in part by the oil price, increases in duty and the VAT increase of 2.5%. This affects everyone but is much harder on people in rural areas that by necessity need a car. A recent report by the Commission for Rural Communities, “A minimum income standard for rural households” concluded that the cost of a basic living standard was 20% more in rural areas. This standard is based on what items ordinary people think households need to afford a minimum acceptable standard of living. Researchers talked to groups of people in rural England about what things are essential in rural towns, villages and hamlets.

The findings illustrate that the more remote the area, the greater the extra expense. To afford a minimum standard of living, a single person needs to earn at least:
- £15,600 a year in a rural town
- £17,900 a year in a village
- £18,600 in a hamlet or the remote countryside
- In comparison, urban dwellers need £14,400, to meet the specified minimum.

One area that the report only touched on was the cost of travelling to employment for people who are in work, the increases in fuel, coupled with rising car parking charges in towns makes some jobs at the minimum wage levels marginal for rural dwellers.

An argument could be made that living in the country has advantages that outweigh the additional costs of living, however I doubt that comes into the equation when you are struggling to find the cash to fill the fuel tank of your car. Anyway I would suggest that this is balanced by the easier access to services in urban areas, leisure facilities, health care, education and public transport.

A consequence of all this is, I believe, a potential increase in the numbers of people who run businesses at home. With a decent broadband connection (I know that’s not the case in some rural areas) it is possible to communicate as effectively from home as it is in the office without the cost and stresses of commuting. If the next few years are about rebalancing the economy then the strategy should include an element of rebalancing the rural / urban costs of living.

Should you want to investigate starting a business why not attend one of BIP’s workshops?