M Institute

Mandelson initiative reaches medium business

As the government announces new support packages aimed at SMEs, M Institute co-founder and chairman Paul Druckman asks if these packages are really addressing the challenges facing medium enterprise in the UK.

M Institute welcomes the business support packages announced by Peter Mandelson, the Secretary of State for Business, Enterprise and Regulatory Reform (BERR). The packages, aimed at the SME sector (small and micro enterprise), actually do raise the game to include many medium enterprises, after much lobbying over an extended period of time by M Institute.

Mandelson’s announcement has three schemes on offer which use company turnover as the qualification criterion. By focusing on size, the government is clearly still not fully embracing M Institute’s characteristics model. However, the size definitions used in the packages show that they are bringing more medium enterprises into their thinking: 

Frail banks corrode market confidence despite public funding

Andrew McErlain is an investor dealing with funding issues in medium enterprises at the coalface. M Institute asked Andrew to comment on the market conditions he is witnessing. Andrew was managing director of outsourcing at KCS Software before its acquisition by Sage in 2007. Here is Andrew's report.

At present there seems to be a considerable gap between the reassuring statements from Government about the freeing up of lending channels and reality at the coalface. It is very difficult to get medium sized acquisition deals funded in the current climate as the banks have little or no appetite for new business.

Judging by recent press commentary about the balance sheet frailty of our leading banks, I wonder if the real exposure to loss here is significantly higher in the banks than has been recognised within official channels. Is it perhaps the case, that because of the underlying complexity of many of the leading banks’ derivative exposures, they still do not know the full measure of their liabilities? This would perhaps explain the constant flow of further bad news from the banks and the increasing realisation that the first round of government funding has proved inadequate.

Trepidation and quiet confidence

Medium-sized businesses’ ability to deploy game-changing IT will help them withstand the recession, as delegates at Information Age’s IT for the M Business conference discovered. M Institute co-hosted the conference and listened in on the discussion.

Information Age's Pete Swabey reports that the current economic crisis will hit medium businesses the hardest. He came to this view listening to the proceedings at the recent IT for the M Business conference. Swabey says, "They have neither the agility of small businesses, which can change tack at the drop of a hat, nor the economies of scale of corporations, many of whom have the cash to sit tight and weather the storm."

As M Institute has often noted, medium businesses (unlike their smaller brethren) are prepared to invest in sophisticated IT, and have a real appreciation of what IT can do to enable the business to scale efficiently. But unlike large organisations, Swabey notes that "mid-sized business don’t have the luxury of getting it wrong or experimenting: IT projects need to be 100% tied to the achievement of business goals, with an intense focus on payback and benefits."