Government must consult SMEs more widely, says new IBA chief

The Institute of Business Advisers, which represents experts specialising in small business consultancy services, yesterday chose Michael Horner as its new Chief Executive. In an interview with Business Europe, Horner says that while the outlook for SMEs in late 2000 is improving, there remains an urgent need for the government to consult with them more widely.

Michael Horner brings 14 years' experience of SME development issues to his new role, having founded and managed the north Derbyshire Enterprise Agency before setting up his own business support service company in Chesterfield. As technology and the government's new Small Business Service threaten to alter fundamentally the role of the small business adviser, it's likely that he will have to draw on all of his resources as he takes up his duties.

The future development of the Small Business Service is the biggest issue facing business advisers at the moment, he says. As with all new government initiatives, there's a fair amount of uncertainty in the early days.

The establishment of the SBS last year has effectively redrawn the outlines of the business advice industry in the UK. The new service, managed by Horner's former enterprise agency colleague David Irwin, has presided over a rationalisation of regional business advice centres, now known as Business Links, from 78 to 45. Although the shake-up has caused some concern within the business support industry, Horner is cautiously optimistic that the standard of service to fledgeling SMEs will improve as a result.

Our view is that it'll make more adviser time available, and will provide a mechanism for maintaining the quality of advice given to SBS clients. But for the moment, there's a bit of a hiatus. We're moving from the old regime to the new, but it'll all have settled down by April.

Any improvement in the general standard of business advice would certainly be welcome. In September, a survey by SME association the Federation of Small Businesses found satisfaction levels with the standard of government-funded business advice running at just 8%, with 14% of respondents declaring themselves very dissatisfied.

Aside from the SBS, business advisers are also having to adapt in a hurry to new communications technology. Once again, Horner has reservations over the short term impact of this development, while remaining highly optimistic about the eventual outcome. In this respect, he is at one with the government's evangelising over the potential business applications of the internet.

The internet is a very different delivery mechanism, he says.Once again, we're going through a period of catching up at the moment, and I'm not sure that all of the 3.7 million SMEs in the country willl ever be connected. But it's a very positive development. Imparting business advice will become more instant and broader. The role of the adviser will focus much more on adding value.

The spread of new communications technology is also likely to improve the average SME's access to professional business advice, another area in need of improvement.

Penetration rates (of business advice) are higher than they have been, but they're still lower than they were ten years ago, Horner says. This is partly because obtaining professional advice used to be a condition for claiming some business start-up subsidies, and also because there's less government intervention now.

Horner hopes that improving both the quality and availability of business advice will in turn boost the survival rates of start-up businesses. Here too, there is room for improvement, although fledgling firms stand a better chance now than they did five years ago.

At present, there are about 450 start-ups for every 400 cessations. At its worst, the ratio was about 450 start-ups to 460 cessations, so there has been a swing, although it is a minor one, he says.

Horner believes that the true key to boosting the SME survival rate in the UK lies in gradually changing national attitudes to entrepreneurship, although he admits that this can only be achieved over the lifespan of a generation.

I'm tempted to say that the fundamental cultural attitude in this country questions the entrepreneur. As many people have said, we ought to become more like the US in our approach to entrepreneurship.

Another obstacle, in Horner's view, is that the government does not make take sufficient account of the disparities among SMEs when consulting the small business sector over proposed legislative changes.

There's a fundamental problem with the issue of representation. SMEs are a disparate group, and the bulk of them don't have a voice. Consultation exercises tend to be dominated by the same group of SME spokesmen who are in fact not representative of the sector as a whole, Horner explains.

The government needs to contact a broader base of small companies, and listen to them more closely, he says.