Tiny pots of investment make a big difference to small businesses, writes DR’s Liz Abell
Do we have to throw large pots of funding at small businesses in the South West to make a significant difference? We at the DR Company have recent experience to evidence that this is absolutely not the case but it is a common misconception that is affecting the progress of our local economy. We recently saw that just £43,013 funding helped 13 small businesses to start up, grow and create 18 new jobs. Sadly fewer and fewer funding programmes are targeted at these businesses, instead focusing on large investments in large businesses.
I have been Managing Director of The DR Company since 2009. We provide bid writing and business support to rural businesses as well as helping to deliver large scale funding programmes for rural communities. What has become clear to us is that small businesses very often need relatively tiny amounts of investment to get them started or help them grow. This is a frequently missed opportunity to boost our economy.
According to the Department of Business Innovation and Skills, at the start of 2017 small businesses accounted for 99.3% of all private sector businesses, between them accounting for 51% of all private sector turnover in the UK. In the South West alone there are over 70,000 businesses with between 1 and 4 employees. Over 7000 of them are in the Agriculture, Fisheries and Forestry sectors. As the figures demonstrate, ensuring small businesses can thrive is a vital part of the South West and UK economy.
The positive impact a small amount of funding can make was demonstrated when the DR Company ran the South Devon Fishing Industry Small Grants Fund. This was developed as part of our larger Coastal Communities Fund (CCF) partnership project to develop the seafood industry in South Devon. The small grants were for businesses working in the fishing industry in the South Devon area (from Torbay to Plymouth).
The grants awarded were between £501 and £5,000. In total £43,013 was granted to 13 businesses, 11 of them new start-ups, each of whom had great ideas to grow and become more profitable. The most remarkable outcome of this fund was the demonstration of how small amounts of investment can make a big difference to small businesses. The latest figures show that from the 13 businesses granted money, 18 jobs were created and 11 new businesses started directly as a result of this investment. That’s one job created for every £2,389 of investment, a fantastic rate of return.
So why did such small amounts of funding help these fishing businesses so considerably? Two examples of beneficiaries to the grants give us a clearer picture:
Frazer Pugh started his Hand Picked Scallop Company in Brixham diving for scallops from the seabed in South Devon and selling them locally. Frazer used his funding to buy his start up basics – a license for his boat The Shearwater, and some essential equipment for the boat:
“The grant was perfect for a startup business like mine, it’s an expensive time kitting yourself out from scratch”.
Frazer’s business has gone on to create 4 new full time jobs and is a thriving local fishing business. In the process of buying a new upgraded boat, Baloo, the results of the funding and Frazer’s hard work and passion for the business has reaped long lasting rewards.
Another example is Mark Taylor, based in Hope Cove. He spent over £30,000 setting up his part time fishing business supplying locally caught fish to restaurants and pubs in the area. Having purchased a new boat, the Minnehaha II, from his own resources he then received a grant of just over £4,000 from the South Devon Fishing Industry Development fund to assist with the purchase of extra equipment for the boat.
‘The funding allowed me to purchase 60 more lobster pots, plus nets, and a net hauler. It meant that I could use the profits from my first year in business to buy the next year’s pots and equipment.’
These two examples (more of which can be read on the DR website drcompany.co.uk/south-devon-fishing-industry-development-initiative/ and the overall successes of the fund show that a small investment can make a big difference for businesses in meeting the costs of setting up and growing. This principle doesn’t only apply to small fishing businesses. Small rural businesses of all types often tread a very thin line between surviving and thriving. Small amounts of financial assistance can enable the purchase of those bits of equipment or tools that would otherwise have not been within the budget of a small business. These purchases save time or labour and improve efficiency taking the chance of a business succeeding from possible to likely.
As Brexit is negotiated it is vital that small businesses are prominent in the discussions and it is valuable to be able to demonstrate that they need not have vast sums of funding available to them for a significant impact to be made. Based on the recent results in South Devon, an investment of only £1.2m could create as many as 500 much needed jobs in the area. The conclusion is simple: small businesses in the South West don’t have to have large pots of funding to make a significant difference to their chances of success.
Managing Director, The DR Company
The was established by the Department of Communities and Local Government and delivered through the Big Lottery. The DR Company are an independent, not for profit organisation who provide friendly, impartial, expert services to support rural projects and businesses. The DR Company develops and delivers funding and also offers a comprehensive range of project services covering business/project planning and bid writing right the way through to project management, and including monitoring and evaluation of complete projects.