TAEFL to fund businesses with recognised growth potential

When a local authority decided to run a course on managing small businesses, it published a prospectus which opened with the words . . .

“Conditions have never been more difficult for the smaller business. The difference between survival and going out of business is an ever decreasing one. While large organisations can employ sophisticated management techniques, a small enterprise depends totally on a few key personnel. This course is designed to help the management of small and expanding firms apply modern techniques to their own businesses.”

It is probably not worth phoning Trade & Export Finance to book your place on the course as it started in September 1974.

There is a sense of déjà vu about that introduction to the first initiative of its kind in the public sector, even if economic conditions for businesses are not as turbulent. When the course got under way, the UK economy was in the grip of a deep recession; there had been a three day week a few months earlier, and petrol had reached a staggering 50 pence a gallon. The equivalent of perhaps 120 pence a litre in today’s values, this is a price that we find tolerable if unwelcome.

The SME in 1974 was finding it difficult to raise money, with far fewer options than there are today. There was no ‘alternative’ finance culture, making the high street banks and personal contacts the only sources of capital: the junior share trading markets had not been created, and concepts such as peer-to-peer would not have been possible technically, even if the concept had already found traction.

Applying business techniques to market and raise money

But finance has only ever been one strand in the process of establishing a business. The mastering of business techniques is as important today as it was when the SME course was pitched four decades ago. It takes a portfolio of skills from human resources through to sales and marketing for the smaller enterprise to succeed. Knowing where to find the ‘right kind’ of finance and make a strong business case to those who hold the purse strings are among the skills that entrepreneurs need to demonstrate if they are to grow. There has always been a demand for specialist organisations able to help SMEs clear the hurdles to growth.

GetSet for Growth is one of the more recent players to become involved in advising SMEs how to develop their operations and point them in the direction of finance appropriate to their needs.

It is part of the Cambridge-based YTKO Group which has thirty years direct experience helping smaller and medium-sized businesses. Back in October 2015, GetSet extended its catchment area to five new English regions having previously supported more than 1,000 businesses in Cornwall, Bournemouth and East London.

GetSet was awarded five delivery contracts from the UK government’s Regional Growth Fund (RGF) to boost the prospects of SMEs. One of the regions is the West Midlands and therefore of particular interest to Trade & Export Finance and its clients.

Quarter of SMEs lack confidence to enter new markets

The rationale behind the RGF initiative was an analysis by BIS in 2014, which found that, despite 73% of UK SMEs claiming aspirations for growth, only 28% felt confident about entering new markets and almost half have had difficulties in accessing finance to achieve this growth. According to the study, the view of small firms was that finance is hard to obtain and information is opaque. Recognising that ambitious British firms need help, the government funded GetSet.

There is a certain logic behind this particular RGF commitment given the unquantifiable impact of earlier Whitehall programmes to boost business growth in key parts of the country. GetSet for Growth is tasked with advising entrepreneurs on business and marketing strategy and coaching, providing one-to-one support alongside advice on funding and its sources.

The key word there is ‘sources’ because RGF money is not channelled as loans or equity to the companies which GetSet For Growth has identified as likely to benefit from its support. Finance remains the ‘territory’ of the funders already in the field – whether the banks, peer-to-peer platforms or other specialist finance companies. The success of GetSet will ultimately be measured by the number and diversity of SMEs that it has helped, and those company’s own success in raising the funds in he marketplace.

Does GetSet for Growth bring something to the table which sets it apart in the SME community?  The organisation is keen for businesses to understand that it is the finance look at marketing and the marketing look at finance that makes it unique.

Getting the message over  through networking

GetSet has to get that message over to the companies which it is in a position to support. It has been featured in the press to a limited extent, including in an advertorial supplement distributed with The Times. But in the absence of a nationwide TV advertising campaign promoting its services, GetSet will have to get its message over to the SME community through networking among the banks and alternative funders. Trade & Export Finance was one of the first ports of call for the GetSet team in the West Midlands.

Kathy Poole, the Partnership Manager for the region, explained that the relationship with TAEFL did not come about simply by trawling through Yellow Pages. “Before joining GetSet for Growth, I was with BCRS Business Loans, a local funder which has worked closely with Trade & Export Finance to provide funding for shared clients. I was aware of the approach taken by Mark Runiewicz and his colleagues in analysing SME’s requirements and tailoring funding solutions to suit.

“Having been a relationship manager in one of the clearing banks, I am conscious of the vital complementary role that companies like TAEFL play in helping SMEs fund their growth. TAEFL has  a good ‘message’ and we wanted to engage with partners who share our objectives.”

Without funds of its own to invest in or lend to its clients, could GetSet be seen as an ‘agent’ for the funders, perhaps directing SMEs to the institutions who pay the highest introductory commission? Kathy Poole was quick to refute that suggestion. “Under the very strict terms of the RGF scheme, we are required to maintain absolute impartiality. Our task is to direct companies to the sources which we, in our professional opinion, believe are best suited to their needs.”

Close co-operation needed with specialist funders like TAEFL

Contractual obligations apart, it is clear that GetSet must maintain close links across the spectrum of banks and intermediaries. “Every business coming through our doors is at a different position on its growth journey. It is therefore essential that we can involve the most appropriate sources of finance at every stage along our clients’ growth path. Part of our task in engaging with SMEs is to demystify the funding process.”

That seems like an interesting challenge for GetSet for Growth given that many of the funding organisations are themselves evolving as conditions change around them. Readers who have tracked Trade & Export Finance Ltd over the past five years or more, for example, will have discovered the increasing range of funding that TAEFL can provide through its associated finance companies UK EXIM and UK EXIM Finance.

It will therefore be essential for GetSet for Growth to monitor carefully developments in the service profile of companies like TAEFL and ensure that they are in a position to give accurate and up-to-date information. For our own part, Trade & Export Finance is promoting a lunchtime seminar at GetSet for Growth in Birmingham on 18 May. Further details of the event are available from TAEFL.

Full information about GetSet for Growth can be found on the organisation’s website at www.getsetforgrowth.com

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