Who wants to help small business?

Small and medium-sized enterprises (SMEs) make up over 95% of all businesses in just about all economies around the world; America, China, Mongolia et al.

A quick google search shows just how many positive central government schemes to promote this sector have been released in the past few months alone. Singapore is providing more cash and defraying costs. Italy has initiated a series of tax reliefs, which will replace bank loans that have dried up. In the UK, there are numerous private and public initiatives to help fund SMEs. Even Skype has launched a new networking platform.

As a business mentor, based near Jerusalem and who works with many SMEs, these initiatives can be readily logged in the “good news” folder. And yet, imagine my concern and frustration when I read about a recent survey. “Israel’s small and medium enterprises (SMEs) employ a lower number of workers, are hindered by more constraints and have lower productivity rates than their OECD counterparts…..”

Apparently, SMEs in the Holy Land are responsible for 99% of all businesses, but are handed barely two-thirds of all bank credit facilities. According to a senior government official:

Figures show that small and mid-sized businesses in Israel are a particularly weak sector, stemming from three main reasons: Extreme regulation, hard to obtain bank credit and loans, and the absence of knowledge due to the lack of a professional managerial rank in small businesses.

However, here’s the real sting. Two months ago, the Israeli government slashed without warning its mentoring budget. For years, the public sector had subsidised an extremely unusual and successful programme that allowed hundreds of new and established SMEs owners to receive the support of professional consultants at minimal rates. In other words, that same ‘lack of knowledge’ mentioned above was deliberately targeted. Today, that hole has been savagely exposed anew.

What is just as shocking is the manner of the decision. Consultants, who had created work plans, were instructed to abandon clients without notice. Sales, production and employment strategies were left struggling without the helping hand of outside support.

The Israeli Ministry of Industry is reportedly planning new schemes, although one must be sceptical if anything can inaugurated before April 2013. (The country faces a general election). In the interim, maybe the local planners will learn from other countries, who are clearly setting the pace for helping SMEs. Of course, I could offer my services as a mentor……..

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