Unlocking the potential of local businesses

Unlocking the potential of local businesses

Posted: Mon 2nd Oct 2023

On Thursday 28 September, Enterprise Nation, in partnership with Mastercard and the Strive UK initiative, hosted local business leaders, political decision-makers, and York Central MP Rachael Maskell to discuss how to unlock the potential of local businesses to help spur productivity and growth. See below for a summary of the discussion.

Address from York Central MP Rachael Maskell

Rachael Maskell MP outlined the challenges small businesses in York face, along with the Labour Party's plan to address them. She highlighted ongoing energy costs, labour skills shortages, increasing retail crime, and the on-going cost of living crisis as key challenges facing businesses in York.

The MP said her aim is to "inject hope into entrepreneurs and businesses in York during this challenging time", noting that there are around 6,600 businesses in the city employing over 100,000 people.

Rachael highlighted Labour's five-point plan for small businesses, which includes:

  • Cutting business rates

  • Cutting energy bills with initiatives including one-off vouchers for firms to boost energy efficiency through, for example, installing a new heat pump

  • Stamp out late payments

  • Revamping empty high street shops

  • Putting more police on the streets to tackle anti-social behaviour

On small business’s access to finance, Rachael said politicians need to move beyond short-term funding cycles, and that sustained long term investment in businesses is required as "short-termism does small businesses no good".

She added that Labour is focused on 10-year planning cycles to provide "stability across markets, businesses and the economy", adding that the party wants to look at the UK's international trade routes, including our trading relationship with Europe, to "help ensure we are well connected internationally".

Business support and funding at a local level

The audience then heard from a panel of local business leaders to discuss business support and funding. It included Sophie Jewett, founder of chocolate manufacturer York Cocoa House; Phil Pinder, founder of The Hole in the Wand; and Toby Cannon, founder of Myles Wellbeing. The session was chaired by business journalist Shelina Begum.

Panellists described the challenges they face, as small business owners, in obtaining loans from banks. For example, it was suggested that even if a small business can demonstrate its profitability, banks tend to ask for personal guarantees before committing to a loan.

Panellists highlighted that the jeopardy this creates is exorbitant, as if the business fails, not only would they lose their job, but they would also lose their home. It was suggested that this jeopardy creates a drag on entrepreneurship and stops businesses taking calculated risks.

Panellists said that government schemes offered to small businesses act as catalysts for private investment, as obtaining government funding boosts small businesses credibility when pitching to potential investors. However, it was pointed out that the short-term timeframes tied to government funding schemes are prohibitive.

On government support to help entrepreneurs export, the former Department for International Trade's (DiT) initiatives were raised as examples of best practice. Phil Pinder said his company found a distributor in the US through a DiT trade mission.

“They created this virtual programme that tied businesses to a potential client in America, and automatically told you when you were both free and suggested a zoom call. This was really useful. Had it not been for government funding and support, we wouldn’t have considered America."

The panel identified three key themes for improving access to funding and support:

1. Access to a community and network of businesses

The community small businesses create and operate in is an essential step in building their business.

"The network you build opens doors to the connections your business needs more than any cash loan or angel investor will."

2. Adequate signposting to available funding and support

Panellists said many small business owners are uaware of funding and support. For example, Phil Pinder's business benefited from a £10,000 Product and Process Innovation grant. He highlighted the importance of newsletters in signposting small businesses to available funding pots and support services.

"We used everything available to us. I get notifications on new schemes from the council and Growth Hub's newsletters."

3. Tackling the postcode lottery in access to funding and support

Panellists referred to England’s 'north-south divide' as a challenge. It was suggested that businesses in London still receive a disproportionate level of support and money compared to businesses in the North. Phil Pinder highlighted his experience at an international trade fair in Las Vegas, where he met a London business-owner:

"He told us about all the help he’d received, and we had none of it. It was just because he was in London, and he was introduced to the right people and networks. The north-south divide is real in this sense and levelling up has just not happened yet."

Access to finance for small businesses

Finally, the audience heard from a panel of local business leaders and bank representatives to discuss access to finance. This included Rachel Dixon, NatWest's local enterprise manager; Simon Middleton, North Yorkshire Growth Hub delivery manager; Cat Smith, British Business Bank senior network manager for Yorkshire & Humber; and OpenOcean’s principal, Sam Hields.

The panel's bank representatives recognised previous panellists' observations on their lending practices, suggesting that they have seen a trend of businesses looking for alternative funders partially due to their risk-aversion as banks.

Rachel Dixon suggested that where NatWest cannot provide financial assistance to small businesses, they want to provide signposting to where they can access finance. She said:

"We recognise we're not the risk-taker in this context, but where we cannot help, we want to at least signpost start-ups to investors or schemes that can help."

The panel then discussed the north-south divide in the context of tackling regional imbalances in funding. The speakers accepted that London's financial ecosystem has existed for centuries and is unlikely to relocate, noting that the 'us versus them' mindset is unhelpful.

Panellists suggested that one way to bridge the regional funding gap would be to help businesses outside the capital to connect to investors and business owners in London.

In addition, it was highlighted that companies operating remotely do not fit within the traditional structure of accessing local finance pots.

It was suggested that one way to overcome this would be to create a new funding allocation system that locates remote organisations through assessing where the economic benefits of their operations are felt, such as where the jobs are created, their trading address and where the economic benefits of their products/services are felt.

Panellists identified the UK's Shared Prosperity Fund, which is due to conclude in March 2025, as a positive source of local funding, but suggested that it is not a sufficient replacement for lost European Union funding.

The panel positively cited the forthcoming York and North Yorkshire Combined Mayoral Authority, which will deliver locally accessible mayoral investment funds.

Following the event, attendees were treated to a tour of Sophie Jewett's York Cocoa House Chocolate Emporium, followed by a round of mini golf at Phil Pinder's The Hole in the Wand, both located in the heart of York city centre.

A huge thank you to our panellists, Mastercard, Rachael Maskell MP and all who attended for an engaging and informative session.

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