Enterprise Development Scheme.

[NoTail]

If you have tried to open a bank account and form a company on the IOM then you would understand why we are going  backwards. 

[Andy Onchan]

3 hours ago, woolley said:

You may say that, Andy, and in a perfect world I might even agree with you. However, it isn't a perfect world.

All enterprises at the embryonic stage start out as projections on a spreadsheet with a big fat profit on the bottom line. It gives the promoters a nice warm feeling inside and spurs them on. In real life, in the majority of cases it doesn't turn out like that. Knowing many business people over the years, I have sometimes wondered, if they'd had a crystal ball as to the outcome, how many would ever have bothered starting the business that they did all of those years ago. Some of them tell me that for sure they wouldn't, or at least they would have gone about it differently. Grants, loans or equity participation by state agencies can be a very useful catalyst to stimulating trade and forming clusters in certain sectors that then draw in more. They can also lead to faster growth than a cautious private entrepreneur worried about losing his house might deliver. If you want to be in the game then you have to play by the rules, and the rules embrace financial assistance.

As for assistance to existing businesses, well, again it's tricky. Say you have 50 staff all earning decent money and paying ample taxes in a high tech sector. You have research ongoing and you may even have had government finance of one sort or another as you grew over several years. Your research is reaching a critical stage. You have clients who have been testing your innovative product and they are going to bring it on stream in their processes within 12 months - or so they say, and then the good times will start. You will be able to treble your staff and put on 24/7 shift work to keep up with the demand and continue your promising research on other products. Happy days ahead!

For now though, you are mortgaged to the hilt. Your intellectual property is held as security by shareholders who have made cash advances and are not prepared to lend any more. Your overdraft is maxed out and you daren't let the bank see the full picture because you fear they might call in your existing loans, let alone advance even more money. You haven't paid the rent for the past 3 months. You know that in 3 weeks time you will not be able to meet your payroll bill and your specialist staff all have families and mortgages to pay. Many of them moved to the Island from secure jobs inspired by the vision of success you painted to them. You lie awake at night worrying about the desperate situation.

So as a last resort, you ring the government. What does the person in Enterprise do? Does he say sod off, and say goodbye to tax and NI from your 50 staff and write off the development grants they already gave you? Does he let you go to the wolves and email DHSS to look forward to your staff turning up at their door next month for benefits? Or does he speak to the advisers, weigh up the situation and agree to drip feed you with close supervision until you can get it over the line? That's how it can be.

Of course it's not a perfect world, Woolley. But I'm asking why should government be the lender/creditor of last resort (aside from collectables on salaries)? 

ETA: I can't help thinking that it's a bit like being at a school sports day, you came last in the race but still get a prize. In other words there's no losers.

[woolley]

43 minutes ago, Andy Onchan said:

Of course it's not a perfect world, Woolley. But I'm asking why should government be the lender/creditor of last resort (aside from collectables on salaries)? 

Well, Andy, if you read that scenario - similar ones are not so uncommon - you can understand the "damned if you do, damned if you don't" situations that they can be faced with. If you are going to take a stand and say we don't provide financial assistance to private enterprise under any circumstances, ever, then at least everyone knows where they are, but we would probably be unique in the western world and out of step with a great many places globally. You must be able to see the risk of diminishing your own industrial base, workforce and the wider economy by staying totally hands off. I do see your point and I applaud your attitude to the protection of taxpayers' money, but I do know that a number of grant aided businesses on the Island have contributed far more back to the Treasury than they were ever seeded with - even if in some cases they never made any money for their owners!

It has parallels with credit control. Do you give a customer some leeway on terms in the hope that he overcomes his problems and remains a customer for decades, or do you sue him for what he owes you and maybe push him over the edge? It's all a matter of judgement.

[Andy Onchan]

2 minutes ago, woolley said:

Well, Andy, if you read that scenario - similar ones are not so uncommon - you can understand the "damned if you do, damned if you don't" situations that they can be faced with. If you are going to take a stand and say we don't provide financial assistance to private enterprise under any circumstances, ever, then at least everyone knows where they are, but we would probably be unique in the western world and out of step with a great many places globally. You must be able to see the risk of diminishing your own industrial base, workforce and the wider economy by staying totally hands off. I do see your point and I applaud your attitude to the protection of taxpayers' money, but I do know that a number of grant aided businesses on the Island have contributed far more back to the Treasury than they were ever seeded with - even if in some cases they never made any money for their owners!

It has parallels with credit control. Do you give a customer some leeway on terms in the hope that he overcomes his problems and remains a customer for decades, or do you sue him for what he owes you and maybe push him over the edge? It's all a matter of judgement.

Comments crossed. see my ETA above.

[woolley]

1 hour ago, Andy Onchan said:

Of course it's not a perfect world, Woolley. But I'm asking why should government be the lender/creditor of last resort (aside from collectables on salaries)? 

ETA: I can't help thinking that it's a bit like being at a school sports day, you came last in the race but still get a prize. In other words there's no losers.

No. You definitely don't get a prize. Start a business, fail and you can still lose your shirt, your house, everything you ever owned, your wife, your kids, your mind. The government is only interested insofar as your business might be good for the economy, and it is on this basis that they might be interested in participating in whatever way they decide. No way are they going to bail you out if it fails!!

[woolley]

4 hours ago, MrPB said:

I think that aside from the people pocketing those grants most business people in the IOM will tell you exactly that. 

You have to account for how you spend everything and you are monitored by regular visits from the govt and their advisors. You have to produce invoices to claim agreed grants after spending the money and send your audited accounts to the department. You will continue to be monitored closely for at least 5 years after your final grant claim. "Pocketing" does not really seem appropriate. It isn't a picnic and the IOM is no different to anywhere else. It isn't like enterprise aid to business is peculiar to the Island.

[woolley]

11 minutes ago, MrPB said:

I meant pocketed in the truest sense of the word. They received grant money and so are more inclined to say positive things about their paymasters then those who have got nothing.That’s all.  

I'm just describing the way it is. You can be against the system and that is a perfectly honourable stance, but if we stopped it we would be the ones out of step and the economy would suffer as a result. Government would have less money not more.