Banks reward small firms for sharpening their skills

SMALL businesses in Norfolk are being offered cheaper banking provided they undertake courses to improve their financial and management expertise.

Most of the high street banks have joined a scheme known as the Norfolk Small Business Initiative. This gives a 1 per cent discount up to pounds 1,500 on business overdraft borrowing or, for firms in credit, a reduction of pounds 150 per year for three years against bank charges to people who sign up for training in business skills.

The scheme is backed by National Westminster Bank, which has put up pounds 100,000 to fund the programme in association with Norwich City College.

During the worst of the recession the banks tended to be ruthless with the managerially incompetent. The Norfolk scheme could signal a change of heart by placing the emphasis on preventative measures against failure through the acquisition of financial skills.

Small businesses are often at a disadvantage when it comes to financial and management skills. Simply because they are small, they may not employ people with the range of expertise necessary to keep the firm out of trouble.

If the business is a one-man band set up with a redundancy payment by someone who has hitherto always been employed and has no previous experience of going it alone, the results can be disastrous.

Research commissioned by NatWest and the Norfolk and Waveney Training and Enterprise Council showed that 81 per cent of small businesses that failed in the area did so because there were insufficient skills within the management team. The problem was how to encourage the vulnerable to get the training they needed.

It was decided that as well as providing the courses, called the Golden Key Package, there needed to be an incentive to get people through the door - and the banks were invited to join in. Those taking part are Barclays, Lloyds, Midland, TSB, Royal Bank of Scotland and Bank of Scotland. They decided it was in their interests to back businesses that had an improved chance of success, so the cash incentives, worth between pounds 450 and pounds 1,500 over three years, were devised.

The courses are open to firms that employ no more than 20 people, have been established for at least 12 months and have an annual turnover not exceeding pounds 500,000. They are constructed by and take place at City College - the banks made no contribution to the teaching content - and comprise five three-hour workshops concentrating on basic financial management training. This covers such fields as planning, pricing strategies, managing resources - including cash - and financing expansion. There is also a review of all the skills needed by a business, including an opportunity to analyse the course participants' firms and discuss problem areas.

Participants receive half an hour's free consultation with an accountant and solicitor. At present no charge is made for the courses, although that may change.

It is recognised that people may have trouble finding time to attend, particularly if they are sole traders, so all the workshops are run in the evenings. So far 20 people have taken part on the two pilot courses, from enterprises as diverse as a blacksmith and a small engineering firm.

A further five courses are planned, which will cater for another 100 participants. In the long term it is hoped to extend the programme to other areas of the country.

Rowland Weal, the NSBI's director, says: 'So far we have established courses that concentrate on basic financial management training, but we plan to build on that. The message we have is as relevant for the sole trader as it is for the 20-man business. When the next hundred people have gone through, we should have a pretty good idea how things are turning out and what needs to be changed.

'My vision, after a year or two, is to have a whole menu of workshop-style courses covering a wide range of topics, from which businesspeople can pick and choose - marketing, computer skills - anything people want.

'So far there has been no government support - we haven't really pressed for any, as NatWest has put up the resources for the scheme, which is sufficient. But I shall be looking for support in future, which might include the local TEC or the Department of Trade and Industry.'

Tony Fox Carter was a production support manager at Coleman of Norwich until he was made redundant three years ago. 'It was the old story,' he says. 'I was too old and overqualified to get another job so I set myself up as an artist blacksmith, making decorative ironwork.

'Although, as a production manager, I was experienced in business, I was not involved in all areas of the big company I worked for, so the course was very useful for filling in the gaps and giving an overview. They tell you how to do your accounts, run your cash flow and use the tax rules to your best advantage. 'Some of the people on the course had never been involved in business before and had no idea. One wonders how they would have coped otherwise.'