Written evidence from Paul Ragan
In the early 90s I founded the cold start insurance
brokerage Motaquote in Cardiff. I was 23 years of age and
had left school in Sheffield with few qualifications. I developed
Motaquote into a multi-million pound business and the country's
leading independent insurance broker.
Since then I have worked across a wide range
of business disciplines and invested in many disparate sectors.
I am a dedicated entrepreneur and have opened a number of cold
start businesses, completed over 20 acquisitions and a number
of management buy-outs.
I feel I am well placed to comment on business
start-ups because I have advised many companies through my not-for
profit agency Collateral Thinking which offers a free mentoring
service to entrepreneurs.
I was initially dismayed to hear of the proposed
closure of the Regional Development Agencies. However, I have
since come round to the idea of Local Enterprise Partnerships.
I feel that they could be a more efficient way of delivering what
the RDA's delivered and that, through the greater involvement
of the private sector, local economies could grow and become contributive
to and better integrated with the national economy.
My main points are that:
— RDAs provided crucial advice and support.
— Business Link is a valuable part of this
introduction into business.
— Mentoring should be a strong part of
LEPs.
— Centres for Business should be established,
led by private sector mentors and managers.
— LEPs should be create, advise and regulate
a local business market to stimulate bank-lending.
— Banks are given "safe investment"
opportunities and should be penalized if they fail in their moral
obligation to lend.
I would be very grateful if you consider my
suggestions, particularly with regard to the mentoring of entrepreneurs
and small-businesses.
THE VALUE
OF THE
REGIONAL DEVELOPMENT
AGENCIES
The RDA in Wales was very beneficial to me with
my first business start-ups. Every entrepreneur needs advice and
support at the beginning of his or her career and RDA courses
are a good, cheap way of amassing information initially. The RDA
definitely contributed to my success in business but the Regional
Growth Fund is about half of the cash that was available to local
businesses through the RDA's.
Last year's Treasury report found that RDA's
were among the most efficient of all government departments. Also,
a study sponsored by PricewaterhouseCoopers in 2009 discovered
that every £1 invested in regional economies reaped a return
of £4.50.
Although RDA's may be going to be replaced with
LEPs, I certainly do not think Business Link, the agency specifically
designed to help start-ups and small businesses should be affected.
BUSINESS MENTORING
IN THE
ABSENCE OF
THE RDAS
Obviously, the government must support enterprise
if business is to lead the growth necessary for us to trade our
way out of the economic deficit. Young businesses need all the
expertise that we can make available for them and especially in
regions like Wales, Scotland and the North.
I would suggest that each LEP takes responsibility
for creating a "Centre for Business" in the majority
of UK counties. Each one would be headed by a non-political, private
sector "Business Champion". Each Centre would provide
all the necessary support for business start-ups, international
trade, sales & marketing, IT development, business planning
and funding.
Business mentoring should be delivered by successful
business leaders and that successive governments have been wasting
public funds on ineffective, inexperienced and under qualified
business support agencies.
The benefit of private sector led C4B's would
bring transparency, enabling easy identification of fast growth
companies where the majority of jobs are created. Today, many
of our potentially great businesses fall shy of their potential
because they simply lack mentoring support or experience.
FUNDING FOR
INVESTMENT
We need politicians to recognise that business
support must be simplistic and speedy, something public sector
lacks the skill sets to deliver. It will take a joint effort on
behalf of both the private and public sector to create a business
advice model that the private sector is happy to support financially.
I believe that business would be happy to support a scheme that
offered services of a significantly higher standard than is provided
today.
I strongly feel that an LEP should foster its
businesses in this way. This should create a stable field for
banks to re-commence lending and tender for business. In creating
a relatively safe and yet highly competitive arena, LEP's could
discipline banks who failed to lend. Institutions gambling on
an overly safe policy of hoarding and not investing should be
denied future access to that Centre for Business' or LEP's companies
until they were ready to trade again.
There needs to be focus on further investment
aimed at enhanced support for the 10% of businesses with high
growth potential across all sectors.
CONCLUSION
If we ever needed a time for radical change,
it's now! We need political leaders who are courageous and prepared
to engage significantly more with private sector business leaders
at grass roots—not simply London plc.
12 August 2010
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