Support to SMEs in the UK - Essay Example

Support to SMEs in the UK Insert Insert Grade Insert Insert Introduction Small and medium enterprises have continued toplay an important role in the United Kingdom as well as in other economies of the world (Dyson, 2012). In the United Kingdom alone, it is estimated that there is about 4.5 million enterprises in the country that also account for more than half of the countrys source of employment. This importance of the sector can therefore not be overlooked. Moreover, with the increased shift towards government and private sector alliances in most nations, it is impediment upon the government of the day to closely monitor and support the activities of the small businesses in the country. It is through the recognition of this fact that the government has the obligation of providing support to the various SMEs in the country. Another important factor about SMEs is through the characteristic growth that they have exhibited in major economies of the world including the United Kingdom. To harness this growth to the national economic growth, there is a need for a good operational environment for such enterprises. The government, private sector and other parties have therefore taken measures to ensure that the businesses are supported for an enhanced growth that will translate into an economic improvement. This paper will critically analyze the support and resources that have been availed to the SMEs in the country in terms of linguistic and cultural support. The paper in the cause of discussions and analysis will also highlight the various agencies that have been majorly involved in the provision of resources and support to SMEs in the country. Financing Financing is not only a key aspect for expansion of business but also an empowerment component for businesses. It is through the various financing avenues that the small enterprises in the country are able to cope with the cultural and linguistic differences as well. This is because the research and programs for the adopting or recognition of certain cultural ideas and incorporation of such culture into the business component requires a lot of resources in terms of finances (Ritchie and Brindley, 2005). There are various financial arrangements available for small and medium enterprises in the country. First, there are two major national wide financial assistance programs. They include the enterprise finance guarantee (EFG) and the enterprise capital funds (ECF). Secondly, there are other separate programs that are concerned with supporting the enterprises within England, Scotland, Ireland and Wales (BBC, 2011). The EFG is a nationwide financial assistance program to SMEs that was established to encourage and enhance lending to the various enterprises from the various commercial banks. Since lending tradition in the country has always followed strict requirement criteria, the government has been able to use this program to assist the enterprises meet these standards. This is through providing a guarantee of 75% to their loans on commercial banks. The enterprises also need to show that they have an annual income or turnover of about 25 million pounds (BBC, 2011). This program is flexible to all enterprises except in the coal industry. The EFG program is therefore a resourceful financial guarantee program that helps enterprises overcome the cultural barriers imposed by commercial banks that traditionally prefer to deal with established organizations because of the strict requirements of lending in the country. Through this program, the enterprises are able to acquire loans, repay their existing loans among other financial undertakings for the support of business growth and expansion. As a result, it is estimated that about 6000 enterprises benefit from this resourceful program annually in the country with enterprises required to access the program through their banks. Likewise, the ECFs are another move by the national government aimed at supporting the growth of SMEs. The program is a capital oriented initiative that involves the government investing in fast developing small and medium enterprises. The government agency that has facilitated this program is the capital for enterprise. As a result, fast growing enterprises in the country are able to be supported by the government through additional capital investments. Since capital is a necessary requirement for say learning of the various languages and helping the employee to train on how to handle the diverse customer pool, this program is therefore an example of support that is available for the enterprises in the country to be able to cater for the barriers. The fund is made available to several entities in the country to provide ease of access. The enterprises only need to surrender a portion of their stake in return for unlimited funding which is very important for growth and competition with the established industry giants. However, it is notable that this fund is mainly meant for fast growth enterprises and therefore getting into this program may require a lot of evidence. As a matter of fact, mostly high technological based organizations are likely to benefit from this program more than the others (Spence and Crick, 2006). Just like the other national program, EFG, the enterprise capital fund has been able to pick the various industries that are eligible for this kind of financial support. After the ten year period of support, the enterprises are entitled to pay back the funds borrowed from the program. It is clear that this is one of the most innovative programs that is available nationwide for the enterprises that strive for excellence. With this type of funding and support, there are resources within the disposal of the various SMEs that is able to ensure that they are able to overcome the stated barriers. In addition, the various other schemes like the regional growth fund, local enterprise partnerships, business gateways among other schemes have been resourceful for the SMEs. For example, the local enterprise partnerships are an example of an opportunity that is available for SMEs in the country to overcome the cultural and linguistic barriers. The program encourages cooperation among business groups and the local authorities in the various regions of the country. As a result, the small and medium enterprises are able to coexist with the others and in the process get to know the various requirements that may be necessary for business success in those regions as well as get mutual assistance from the local authorities. Apart from financing, another important area of support available to the enterprises has been advisory and information dissemination. Advisory Many enterprises are likely to fail because there is lack of information and technical support on the best ways to operate in certain competitive industries. In the case of linguistic and cultural barriers, advisory services and the availability of information on industry culture and customer requirements is very important for business growth. The United Kingdom through the government has provided a good atmosphere for the availability and access to information. A good example is the country’s chamber of commerce (British Chambers of Commerce). The organization is a network of organizations from all levels and industries in the country (BCC, 2013). An opportunity is therefore available for enterprises in the country that are members of this network that may be helpful in overcoming the cultural and linguistic barriers that may exist in the country or the region they operate in. For instance, being a member of this network may be useful to the enterprises in the sense that they are able to get information on the opportunities in the country, knowledge and experience of established operators. This is very important for SMEs who are faced with the barriers stated in this paper. Apart from the chambers of commerce, the enterprises have numerous avenues of acquiring information and advice. Another example is the country’s federations of small businesses that brings together SMEs in the country and provide support concerning various issues of business operations in the country. By being a member of this organization, the enterprises are able to benefit from advisory and lobbying it offers. This is an opportunity for enterprises that may be facing discrimination in the industry because of the linguistic or cultural barriers. Through the lobbying this organization provides, the plight of these enterprises can be readily heard and solved amicably by the relevant authorities. Moreover, technical support on the cultural environment of the country is available to the enterprises through various professional enterprises in the private and public agencies. For instance, the enterprises may get advice from the numerous consultancy firms spread across the country. Since the firms are established in the localities, they are able to point out the possible obstacles and give appropriate technical measures that these enterprises can implement to ensure they overcome them. The availability of information is not only limited to the agencies and organizations but also can be approached through the local media and other publications readily available in the country. Training of SMEs is also another program that has made them overcome the associated barriers. Training Training is important because it ensures that the operators understand and apply the technicalities and knowledge on tackling the barriers that present themselves in day to day operations. The government has been in the forefront in liaising with the private sector player to ensure that the operators are well trained (Stokes, 2001). This has been done through the various development agencies and partners. Since SMEs play a significant role in the development and expansion of the country’s economy as stated earlier, the government has been firm on the training programs. This initiative alone provides a ready opportunity for the enterprises faced with linguistic and cultural barriers to exploit. Since training programs also touch on the issues that this paper is concerned with, it is therefore true to state that such programs are beneficial for the elimination of barriers in the operational environment. This is because it is only through knowledge and specific expertise that they can effectively tackle the problem. On the other hand, the government has been recruiting volunteers from the small businesses to come together and train upcoming leaders in the various academic institutions. This initiative is also beneficial to the SMEs facing the said barriers because interacting with students may be good at providing ideas of tackling the challenges they face (Darabi and Clark, 2012). Exchange Programs There are also programs that have been initiated by the government and the private sector separately or jointly that are good avenues of tackling this challenge. The cultural exhibitions and enterprise promotion programs are good examples of opportunities available for enterprises to overcome the stated barriers. Exchange programs also involve business community members coming together to discuss the trends, challenges and opportunities that exist in specific industry segments of the economy. They provide a good opportunity for enlightenment of upcoming businesses. In terms of the linguistic and cultural barriers, small businesses are able to get real hand experience on how to deal with the issues associated with the said barriers. This is because they are able to share their experiences with other entrepreneurs who have managed to overcome those challenges before. Exchange programs are also available through the global alliance of Alliance of SMEs, which may be essential in assisting enterprises with a dream of going global (GASME, 2013). Conclusion It is therefore clear from the discussions above that the SMEs in the United Kingdom have varied resources and opportunities to help them overcome the barriers presented by cultural and linguistic factors. Even though there are numerous avenues that are practically helpful in combating this great challenge, financing cannot be ignored and that is the reason this paper has given emphasis on the area of finance (Spence and Schmidpeter, 2003). Provided the SMEs are able to look out for and exploit the various opportunities that exist in the country, they will be able to effectively tackle the linguistic and cultural barriers (Jones and Tilley, 2007). Bibliography BBC. 2011. “Government financial support for SMEs.” BBC Business, [Online]. Available at: http://www.bbc.co.uk/news/business-12049304 (accessed 8 April, 2013). BCC. 2013. “About the BCC.” British Chambers of Commerce, [Online]. 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