Alan Sugar is wrong about small business owners
Alan Sugar recently said small and medium sized businesses (SMEs) were “moaners” who “lived in Disney World”. Clearly, he doesn’t seem to buy into the policy initiative that the UK government has set up that sees the banks lending to SMEs to help them weather the current economic storm.
I believe this is evidence that he may have forgotten the lessons of his early years as an entrepreneur.
I find, whether it’s in the Dragon’s Den or through the companies we meet at Ariadne or Entrepreneur Country, that it is training and guidance which is required to help match the right funds to the right company at the right price.
Lots of managing directors that run SMEs will not have encountered such bad trading conditions before in their lives, and so they need extra assistance in understanding how to navigate their ships through the current challenges.
In particular, they need to understand better how to reduce fixed costs, tighten contracts, negotiate, market and sell more effectively , prepare more detailed and more flexible forecasts.
And they need access to more types of finance from grants, to private equity, private debt and banking finance.
There is generally a price at which debt or equity can be secured if the entrepreneur is prepared to be flexible; they might not like the price, but that’s much better than not being offered a deal at all.
Historically, a lot of money and cash may have gone into a firm, but that doesn’t necessarily mean that the firm has achieved the revenue, profit, market share or momentum milestones which would lift its valuation to take it to the next level.
That can be a tough conversation to have with an entrepreneur. But if being straight with them leads them to secure financing at a proper valuation, then they are happy at the end of the day with being able to move their business forward.
In my experience, none of us would have got wherever we have arrived without some help and understanding along the way. Better to “send the lift down” to help the next generation of entrepreneurs and SMEs to get to the next floor up, than to moan their they are not superstars yet.
I am unrepentantly optimistic about the role of the entrepreneur in society. Entrepreneurship is the only way to create real, sustainable wealth in our economy.
Alan Sugar of all people should know that.
Julie Meyer is chief executive of Ariadne Capital.