Small Business White-Out

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Snow – It’s the stuff of childhood Christmas fantasies. The intricate form of its flakes is one of nature’s true wonders. And waking up to a thick blanket of the stuff outside your front door makes even the toughest individual regress to a time when snowmen and tobogganing was all there was to winter life. However, as usual this country’s ill-preparedness for the winter weather has hit us hard and in a time when sources of business funding are so scarce small to medium sized enterprises (SME) have suffered greatly.

According to a Lloyds TSB survey, this winter’s white-outs have cost SMEs somewhere in the region of £7.3bn. Now that’s a scary big number. The snow and ice that seemed to come thick and fast and last longer than any other winter in recent history repeatedly left thousands stranded or struggling to get where they needed to go. Trains were stopped in tunnels, cars couldn’t make it through the snowdrifts, planes were grounded, lorries jack-knifed, in fact no matter what form of transport you took there was chaos. With sources of business funding practically non-existent, SMEs were left exposed to the full ravages of nature backed up by good old fashioned British services incompetence.

The problem was that not only could customers not get to retail outlets to buy, but deliveries could not get through, manufacturing ground to a halt because you can’t make anything when the raw materials are stranded several miles down the road and the workforce couldn’t get out of their front doors anyway, and the odd power cut disrupted even the technology and service sectors. It is my hope that when banks, venture capitalists, business Angels and other sources of business funding look at the trading history of companies seeking finance they will take this into account because there will not be many businesses out there that will not have suffered some loss as a result.

The study showed that 70% of the 1,003 SMEs surveyed said that they had either been directly or indirectly adversely affected by the weather this winter. A random 7% actually said that the weather had helped their businesses, presumably they sold winter clothing or toboggans or even summer holidays so their customers could get away from the UK chill. There is no doubt though that SMEs looking for sources of business funding will have had even more difficulty than usual with bank doors as closed this winter as their coffers have been for the last few years. This additional strain may well have been too much for some and the statistics on business closures over and after these winter months are bound to show far more closures than usual.

As sources of business funding go, the business Angel sector has remained far more stable than any other. Because of the simplicity of the finance decision process when compared with other sources of business funding and the disparate nature of the Angel finance market, we have seen even more interest than usual when the banking system again fails the struggling innovators who help to keep our country pushing towards a full recovery from recession.