Late payments are costing small businesses dear, according to a report by the Small Business Research Centre (SBRC) at Kingston Business School. The government does not pay up quickly either, with one in five small businesses waiting more than 10 days to be paid for public sector work, despite government claims that payments would be speeded up.
In fact, UK SMEs were owed £25.9bn at the end of 2008, an increase of 40 per cent over the previous year (BACS 2009). And 57 per cent of SMEs report late payments at some time, up from 51 per cent a year ago. So there’s little scope for small business owners to contemplate investments, or to strike out with new ideas.
‘Business Strategies and Performance During Difficult Economic Conditions’ was commissioned by the Department of Business, Innovation and Skills to see how it could help firms deal with the downturn. It says the government should jettison its sectoral approach to business initiatives, and see things in the round. It’s already doing this with the motor racing industry, giving exemptions and incentives across the sectors involved.
Innovation can help us out of this crisis, so it’s time to encourage cross-boundary thinking, spanning different trades and industries, says the SBRC. It recommends setting up a high-tech nerve centre like Silicon Valley in the US, but it also comes to some hard-hitting conclusions. There’s no point in persisting with past business models and, rather than bailing out dying industries, taxpayers’ money should be used to stimulate innovation. Could this be a solution for our times?