The following is a note submitted by Nick Gould following the Westminster Media Forum Keynote Seminar: 'The UK fashion industry - challenges, opportunities and policy options'.
The absence of a proper funding structure for starts ups and developing businesses (SMEs) in the fashion sector may well deserve a separate debate and it is certainly a key to the future health of a large part of the sector. It is a major and indeed primary worry for many smaller manufacturers and designers. The ideas of brand protection, expanded workforces, new premises and overseas sales are great, but without cash, are all unrealistic.
The cash required can be generated from the businesses themselves which I think is unlikely for most small companies. Alternatively it has to come from outside funders. These might include business angels, commercial banks, friends and family and for large amounts from venture capitalists or even private equity firms. But these can, in so many instances, be difficult for the intended recipients to deal with. The time spent and the costs of arranging funding often seem to be a big distraction from just getting on with the business. From my own observations and discussions with many clients who are looking for cash to grow their fashion businesses, as well as from numerous comments addressed both to panellists as well as in conversations between the sessions, this needs to be pushed much higher up the agenda. It is still beyond me why it is so hard to obtain funding for SMEs in so many instances. Let's not forget:‐
- There are 4.5 million small businesses in the UK (those with up to 50 employees);
- SMEs (those up to 249 employees) account for 99 per cent of all enterprise in the UK, 58.8 per cent of private sector employment and 48.8 per cent of private sector turnover;
- SMEs employed an estimated 13.8 million people
So they ought to be a very powerful group which should be of considerable interest to the Government, whichever party is in power. But for some reason it appears they aren't! Are they adequately supported in this particular area, I don't know, I don't think so. The amounts required by many SMEs, is a lot less than most people think. £50,000 at the outset is often more than enough and from my research the idea of a start-up receiving say £250,000 would often be seen as a burden.
Maybe the solution is in more creative methods, such as crowd‐funding, for this specific sector. It is something I and others I work with are thinking about at the moment. As mentioned I still am baffled as to why one or two major banks don't allocate an amount to this particular business sector, specifically. I am not sure any of them do so. I know all the arguments against, including costs to the bank, administration issues, follow ups and so on. However if the sector is as strong, entrepreneurial and more importantly key to the UK economy as I keep hearing, I find it hard to see why such an allocation of funds is not seen as worthwhile. All views would be most welcome.