The UK Government and British industry must do more to protect and turnaround failing businesses, according to Lord Digby Jones, Business Ambassador at UK Trade & Investment and former trade minister.
Lord Jones said the country has become far too risk averse, and has lost an understanding of the risks that are necessary in business to create the sorts of rewards and innovations that we have become accustomed to.
“It is a sad fact of life that twenty-first century democratic capitalism has become so risk-averse, so politically-correct, so prey to the siren voices of a compensation culture – the likes of which we have never seen before,” he said.
Lord Jones was speaking at the Institute for Turnaround (IFT) 2014 National Conference.The IFT is the leading non-profit professional body in Britain and Europe for operational, funding and advisory practitioners in business.
In his speech, Lord Jones saidsentiment in government and society as a whole has become too critical of small businessesand unforgiving of the inherent pitfalls that exist for small companies.
“With any small business, especially one in its early stages, there are obstacles to overcome and calculated risks that must be taken in order to generate wealth,” he said.
“Too often the emphasis is put on failing businesses – without the appreciation that there always exists a risk-reward aspect to growth and generating profits.
“We understand that not all businesses will succeed, and when they do not, they need skill, courage and capital to give them the time necessary to review options, take advice from others and turn around their fortunes.”
Mark Orton, partner at KPMG in Birmingham and chairman of the IFTMidlands, said: “For SMEs and mid-market firms, the recession has re-set the business landscape for the next decade. Access to finance remains limited, which in turn restricts growth and limits investment into businesses, their employees and the wider economy. It is no surprise that many businesses remain dormant under these circumstances.
“Furthermore, managing uncertainty and operating in an economic environment where the strength and depth of the recovery remains unclear is a serious challenge. Growing a company is a necessity not an option – once you stop, backsliding is inevitable. All companies must grasp their opportunities, and be allowed to take calculated risks, simply to keep going.
“Rather than turn our backs on struggling companies, our aim should be to help them achieve sustainable growth for the long term, through effective government policy, the skills of turnaround professionals and wider support.”