PART 1
(OPEN TO THE PUBLIC)
ITEM NO.
REPORT TO THE
LEADER OF THE COUNCIL AND LEAD MEMBER, CHIEF EXECUTIVES DIRECTORATE
Date: 23rd January 2006
TITLE: Status report on support for small firms and new business start –ups
RECOMMENDATIONS: To acknowledge existing provision and possible loss of services for
financial year of 2006/07 and beyond.
BACKGROUND DOCUMENTS Economic Development Strategy, Community Plan
CONTACT MEMBER / OFFICER: Stuart Kitchen Assistant Director Economic Development
WARD (S) TO WHICH REPORT RELATE (S) ALL
KEY COUNCIL POLICIES (that have an impact on service delivery)
Economic Development Strategy, Community Plan
Background: History of Enterprise Agency and ChamberLink delivery – type of service
Stats/ successes.
Salford Hundred Venture (SHV) was formed in 1987 as a non profit making company dedicated to
fostering the birth, survival and growth of small firms in Salford.
The agency was established to meet the demands of an increasingly entrepreneurial city in the
1980’s. Since then, this demand has grown and the agency has grown and adapted to meet this
demand, serving increasing numbers of new and existing in businesses with an ever growing
range of relevant services.
Since 1990 much of the support offered has been funded via contracts with Manchester Training
and Enterprise Council and it’s succeeding bodies, currently ChamberLink.
SHV offers a comprehensive range of services to new and existing small companies which
includes:
 Initial proposal assessment
 Business planning
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Raising finance
Enterprise training
Regular reviews and health checks
Comprehensive and expert advice in numerous disciplines such as marketing, recruitment
and financial management
 Information and networking services
 Sales, Health & Safety, Customer Care, Management and Computer Training (many
nationally recognised certificates).
SHV has also been a key partner in the highly successful Salford Early Years/SureStart projects.
The agency has been instrumental in developing a highly regarded programme of training for child
care practitioners and a range of services that will enhance the sustainability of many of the
settings.
SHV have produced very impressive results in all their activities and have delivered these services
with a very high level of customer satisfaction measured independently at over 90% and
anecdotally by the fact that well over ¾ of referrals to the company are by word of mouth. Latest
independently assessed figures show a very high 3 year survival rate of new businesses supported
by SHV at 68%.
Since March 2001, SHV have assisted in setting up 540 new businesses in Salford from around
2500 initial business proposals. At the same time around 3200 existing companies have accessed
advice, information and training services.
It is fair to say that both through longevity and the volume of delivery, that SHV are a part of the
fabric of the business community of the city, are a trusted resource for many small businesses and
have been influential in the creation of many jobs and opportunities.
Current position including funding support
At the present time the situation relating to funded business support is as follows:
New Business Starts – SHV contract with ChamberLink ended in December 2005. SHV, Ridgway
Associates and Manchester Business Consortium have been successful in submitting a coalition
bid for new business start up services in Salford, Tameside and Manchester respectively. The
allocation of funding for these contracts has maximised available ERDF and is just over 20% of
previous years - as a result ChamberLink have asked for a revised model of support services to
reflect the dramatic cut in funding. It is suggested that clients under a new proposed delivery model
will have 5/6 contacts – via one to one or group sessions - compared with 17 in the previous
model. While it is accepted that this is a result of financial stringency the delivery model has no
provision for post start care which could have a bearing in survivability prospects.
It is estimated that the number of new business starts will reduce from 150 to below 30 p.a. in
Salford - if indeed a new viable model can be devised.
Support for Existing Business – ChamberLink are no longer providing funding for specific Micro
Business Support – partly due to the reduction in funding for business support. ChamberLink will
be providing direct delivery of business support to small and micro businesses as part of their
overall business support package - including services such as Business Information, Client
Relationship Management, networking and specialist support such as International Trade advice
and the European Information Centre services. The services offered by ChamberLink complement
current support for existing businesses but do not directly relate to the activity involved in dealing
with the operation and training requirements of micro companies. The Agency does have
recourse to the business information centre amongst other sources but the other facilities on offer
are more relevant to the larger and more developed firms and businesses than small and emerging
businesses in Salford.
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Neighbourhood Renewal Funding – SHV currently have a contract for 2005/06 to deliver business
support services to start up and existing companies. This funding is currently filling the gap left by
the withdrawal of ChamberLink contracts, but after March 2006, there will be a large funding gap
for services demanded by, on average, 700 local businesses per year.
SHV funding shortfall
SHV’s last set of audited accounts for year ending March 2005 showed a trading surplus within 3%
of turnover. On projections for 2006/07 the shortfall on a breakeven turnover would be £300K as a
result of the reduction in start-up and micro funding. The nett. deficit to make up this shortfall would
be £245K after allowances being made for the current start up contract.
The overall reduction in revenue arising from the termination of micro support and the reduction in
start funding has at least medium term implications for the viability of the Salford Hundred
operation.
Future sources of funding
Indications are at this stage that any business support programme will not receive support from the
Local Strategic Partnership for Neighbourhood Renewal funding for 2006/7 as the partnership did
not identify business support as a priority area.
For the past few years, business support has been funded largely through ERDF, however, with
the termination of this stream, a large gap has opened up.
ME have proposed other sources of funding from the Learning Skills Council and Learn Direct,
although this has not been established at this point and neither source would seem suited to the
provision of a flexible range of support and development services. A key element of the Local
Enterprise Growth Initiative is to provide funding for business support and new business starts. The
levels of support for existing and new businesses detailed in the LEGI submission were building
upon and complementing current provision, if this is taken away LEGI interventions will probably
only result in maintaining current levels of new business starts and survival rates.
Hence it is anticipated that there may be no resumption in the previous levels of business
support for new companies.
Hence despite an obvious demand for value in the services to new and small firms, it is easy to
imagine a situation where there is no continued support of this fashion for business in the city.
Impact of reduced funding and services –
Embedded within the Economic Development Strategy there are a number of Key Performance
Indicators chosen to allow the Economic Development Forum to monitor the economic climate in
Salford. Within this performance table several indicators relate to supporting the creation of new
businesses, which will be affected by the lack of clarity surrounding funding available to support
new businesses in 2006/7. These indicators include amongst others; the number of new
businesses surviving 3 years, the number of relocations into and within the city, and the number of
jobs created through support to community enterprises. As well as these key performance
indicators there are also two Local Performance Indicators, which will also be affected. These are
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LPI 97, the Number of new business start- ups and LPI 101, the No. of jobs created and
Safeguarded.
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