How Can Government Support Business Growth in the UK?
Judging from major shopping centres and high streets, it is easy to conclude that the UK is dominated by large successful businesses. “However, Office for National Statistics figures (2008) show that 89% of all UK enterprises have less than 10 employees and 98.1% have less than 50 employees; the very largest companies account for just 0.4% of all UK business enterprises” (Birchall, 2009). Although there are several advantages of being a small firm, most businesses want to grow and this inspires the question: “What is business growth?” LinkedIn (2012) defines business growth as “an innovation that delivers solutions to customers while adding value both internally and externally to our processes as well as increasing customer value while increasing profits”. In less complex terms, a business is said to be growing when it gets a better return on its investment. In this essay, I will be discussing the ways the government can support business growth. In doing this research, a question popped in my head, “Why should the government support business growth?” One of the major problems facing the UK currently is unemployment. Once a business starts growing, it is essential to hire more people to help power the development and ensure stability. As such, the problem of unemployment will be considerably reduced. Secondly, Stokes and Wilson (2006) have argued that “in recent times, small firms have proved to be an abundant source of very inventive ideas however, they lack resources to put them into practice without external assistance”. They also highlighted the fact that small firms are essential to compete with larger companies by providing alternating sources of supply thereby playing an immeasurable role in the anti-monopoly policy. Insufficient finance is a major cause of business failure and this is one of the major hindrances encountered by businesses in their pursuit of growth. “Finance is critical for starting, maintaining and growing small and medium businesses therefore, it is vital that both start-ups and existing businesses have access to the full range of debt and equity financing options” (Department for Business Innovation and Skills, 2010). Cameron (2011) in his speech about the role of small businesses expressed his shock at the way small and medium enterprises are blocked out of procurement and acquisition opportunities. In applying for bank loans, a business is required to possess a form of collateral or guarantee to support the application. Unfortunately for most businesses, they do not have sufficient collateral to back the application. The government can therefore set up schemes to help entrepreneurs obtain finance from financial institutions by agreeing to guarantee loans. For example, in 2011, Hong Kong launched the SME Loan Guarantee Scheme which was aimed at helping small and medium enterprises (SMEs) obtain loans from financial institutions and in one year, there has been tremendous growth in several industries (SME Fund, 2012). In addition to guaranteeing loans, the UK government can also help firms or industries attract external investors or experts in specific fields – private individuals and companies. This can be achieved by either providing certain incentives to the investors and experts who will not only provide the funds needed to run the business but possess the knowledge and expertise required to grow the business; or creating a platform for entrepreneurs to present their ideas to these investors. In 2005, the British Broadcasting Corporation, backed by the UK government launched a show, Dragon’s Den (BBC, 2012). This was aimed at giving entrepreneurs the opportunity to pitch their businesses to five of the most wealthy business moguls in the UK. Also, in 2005, Mozambique’s government solicited the International Finance Corporation (IFC) to help develop their tourism sector and in less than five years after, Mozambique has attracted over $33...
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