Are UK SME’s and startups being starved of seedcorn working capital?

I have just returned from amassive show at the eXcel centre in London’s Docklands. It was a surperb show for those who were well on their way, and in need of sail-trimming and tertiary services.

What it lacked, apart from one exception which I found and I thought expensive, was a hub of cash-providers of small loans for small startups looking to fund a couple of laptops and an airflight or two.

“Go to the banks!” I here the cry rise. Tried that, with my business account provider, and was told no loans, business, overdrafts or personal are available. But, did I want any additional insurance? Not at the moment, thanks.

What??!!

I know things are tight for the cash-strapped financial sector but this is supposed to be a capitalist society. Both sides say so.

So where does one get small amounts of working capital to fund marginal R&D in the new technologies? Without getting into trouble or shady deals?

If the UK Government would heed any advice, it is to get some small loan mechanisms working before the seedcorn of capitalism is finally choked off by the profligate actions and inactions of the previous socialist government, and the failure of the regulatory bodies to constrain the banking sector. 

Support for the Government economic canvas for now – however, bold strokes needed

I am mellowing in my old age. Or overnight at least. It seems that the Prime Minister and his deputy were in our neck of the woods, in Essex, UK, yesterday and announced, in “Rose Garden II”, that they were going to concentrate on the economy, which was found in worse condition than had been expected.

Given my somewhat tongue-in-cheek-but-in-all-seriousness blog yesterday, I am disposed to give them the benefit of the doubt for a little while yet. But we must see some real seismic thinking, thinking out-of-the-box, if we are to find a real set of solutions to our de-industrialization, the post-modern catastrophe.

First of all, our trading relationships need to be looked at. A busted Eurozone may be a millstone, not a bonanza, whilst the the BRIC countries are increasingly brewing their own, as it were, and may not be an open export environment for us. Thus we must look at protection of our indigenous markets and entry to old Commonwealth markets, possibly long neglected, as well as new markets with a broad brush to give bold strokes.

This is not the time for petty-fogging civil service-rules cheeseparing. The UK Government must be bold in our interest, but not stray from the British instincts of trade-based independence and power-balancing.

I hope they get it right.

I could make a better hand of running the country than the current lot

It is no good. One cannot shake the feeling that things are not as they should have been in the UK on at least two fronts:

1. Firstly, I could do a better job of running the country, or major parts thereof, than the current lot.
2. Secondly, careers are being squandered as though they didn’t matter when we should have all been mobilised in a creative cloud for national economic survival.

Capitalism and socialism both appear to be more wasteful of human capital than realized by our generation.

There has been largescale de-industrialization since the 1970′s which diminished the opportunity for proper high-skilled management posts, as well as large-scale redundancy in the unskilled and skilled sectors without replacement in the so-called but nowadays rarely mentioned ‘Knowledge Economy’.

The “Green Economy” is barely mentioned, either, possibly because the largescale windfarm manufacturing and project management is reputedly often going to overseas companies.

We have the productive capacity to develop a ‘Knowledge-based’ economy, but we have not developed the necessary sophisticated monetization mechanisms to share the wealth. Businesses are not spending money on ephemeral creativity but hoarding it, according to newspaper reports.

As I say, I could do a better job. I dare say so could a few others. I shall not rehearse my position here but please read recent blog entries to see what I think.

UK economic hope stuck between “R and D” cascades and low-cost titans on either hand.

I am beginning to make sense of the tectonic forces which are shaping our economic lives here in the UK. We are, in effect, falling between two titanic stools of R&D cascading, and low-cost manufacturing with service supply. We are to use the vernacular, stuck between a rock and a hard place.

On the one hand we are dependent upon the USA to cascade the wherewithal for technical development, most obviously in the global platform paradigms of Windows or iOS or Android, which can be after the domestic US suppliers and developers have had first-peek at what is on offer. The new developments are cascaded across the Atlantic sometimes at a pound-for-dollar pricing policy ‘to cover shipping’? So we might pay over the odds to download software where it isn’t free.

To be fair there is a lot of freeware around, but it does seem to be half a pace behind sometimes. Nevertheless there is a lot of exciting development software available at low cost in the HTML5, CSS3, Javascript environment, and this should be an ideal opportunity to get in with needed products and supplies to customers.

Then comes the second tsunami: the low cost availability of Chinese and Indian software engineers. These are currently competing in our markets sometimes at below minimum wage prices. We are structurally prevented from competing, even if that were a living wage in the UK for skilled “Knowledge Economy” people.

There we have it: second look at cascaded tools and undercut at the provider stage by low-cost competition ‘dumping’ on our markets.  Meanwhile there is the Trojan Horse of Euro competition dressed up as ‘trading partners’. They do not seem to want to trade with us, they want to compete and possibly ultimately eradicate us as competitors. Ex-President of France Sarkozy’s recent jibes about the UK having ‘no industry’ shows their hand.

Thus I am getting to grips with the strategic realities which faces we SME entrepreneurs in the UK.

It is starting to look like we are at the mercy of tectonic forces which are bigger than the ability of one or more political parties to rescue us from. It may be bigger than our current political unions can cope with. We may need to break free as an independent nation and protect our markets with tariffs and trade barriers. We may be living in a post-Free Trade World for us; one where we no longer have the means for largesse. Perhaps that is the paradigm shift we need to realise?

Tariffs needed to protect UK SMEs from the ‘Global Economy’ and UK minimum wage

Recent events have indicated to me the effects of unsustainable minimum wage legislation and the global economy.

The facts are these:

• I was informed on Thursday by a local source that they could offshore software development in China with high-calibre graduates for $1000-a-month. This is directly competitive with my company and its services in the local area.
• I saw Indian software companies offering competitive development services for £900-a-month at “Internet World” show at Earl’s Court, London, also on Thursday. This is also directly competitive.
• In a previous search of the internet a little while ago, I found an Indian company offering offshore software development at $4-an-hour, $640-a-month.
• I have to charge at least £1300-a-month because of minimum wage legislation.

Thus my company is having to compete in a global marketplace at eye-watering rates. Ultimately the UK minimum wage is unsustainable, according to simple market and global free-trade economics.

 We need to be protected from such competition. To argue otherwise is to ignore our higher costs of living. And to say do something else is a bit late because this was supposed to be a sustainable ‘Knowledge-based’ economy?

Whither the tractors-and-wheat example of ‘Comparative advantage’? 

SMART SWARM Innovation Groups – some general observations

Having held the fifth meeting of our Chelmsford Innovation Group, I thought it time to share some general observations about the caveats and benefits of forming such a group.

1.  The commitment to open discussion of technical ‘pet projects’ may make us feel uncomfortable and run counter to our confidential culture. The trick is finding a ‘state-of-the-art’ balance where people feel able to share information without feeling they are giving too much away. Some may not adapt at all.
2. The vastly differing technical backgrounds of such a self-selecting group is both a benefit, in stimulating off-piste ideas, and a drag on progress while everyone feels for common ground. There may be no way round this other than diligent chairmanship of the meetings.
3. Finding appropriate group working tools is crucial. We have used LinkedIn.com groups for our group communications, Skype for “Country Members” videoconferencing for our meetings, and trello.com for our project specific activities. It is important to get the balance right between ease-of-use and function-richness.
4. Momentum needs to be garnered and maintained, as with all group working.
5. The excitement of new processes coming together is what it is all about, particularly when implementing an innovative new method such as “Smart Swarm”.
6. Recognize and encourage the natural enthusiasm of people who tend to be attracted to such a group. It is stimulating just to be in the company of such people and they make it worthwhile.

Tally ho!

UK Innovation needs “Virtual Manufacturing Simulator” for stimulus

I have thought this week about Innovation a great deal. Something a German MEP said on the BBC a little while ago made me sit up and take notice.

When she thought about innovation in the UK from an EU perspective, we lacked the stimulus from manufacturing, which has diminished as a business sector.

I have considered the implications of this, and they seem quite profound. I thought about tool design, which nowadays is less about the grinding machines and drill bits of my youth, and more about the “Thought-ware” – software paradigms. Then I thought of the lack of design innovation which comes about from not actually experiencing use of these intellectual tools on a mass basis. We as a nation have large numbers of people who are no longer participating in the process-rationalization of civilization. Phew! 

And we are missing out on that use being the progenitor of new intellectual products and processes.

Somehow we need to get manufacturing back into the UK. 

It will take an act of faith to jump on the technological rachet at a particular investment point, and perhaps the first stage is to recognize componentization, and the attractiveness of screw-driver manufacturing. But if the banks would invest, not at one hit, but as an increasing curve of investment in state-of-the-art, then we should at least be implementing the opportunity to add stimulus to our intellectual creativity.

Or perhaps we should invest in a “virtual manufacturing simulator” which people can access and ‘play’ with to improve their intellectual processes and thoughts on innovation?