Jersey Business Venture: future role.

STATES OF JERSEY

JERSEY BUSINESS VENTURE:

FUTURE ROLE

Lodged au Greffe on 5th September 2011 by Senator A. Breckon

STATES GREFFE

2011   Price code: B  P.150

PROPOSITION

THE STATES are asked to decide whether they are of opinion

1. to express  their  confidence  in the  current  work,  role  and responsibilities of the Jersey Business Venture and to agree that the States of Jersey should accept the Jersey Business Venture as the sole independent provider to be supported by the States of all advice and practical support to individuals and businesses seeking to establish and/or develop commercial activities in Jersey;
2. to agree that itis appropriate that an annual grant should be made to the  Jersey  Business  Venture  from  the  States  of  Jersey  and  that proposals  for  the  grant  should  be  included  in each  draft  Annual Business  Plan  (or  in any  equivalent  future  expenditure  plan  that replaces the Annual Business Plan process) for approval by the States;
3. to request the  Minister for  Economic  Development  to request  the Jersey Business Venture to produce annual Reports and Accounts to the States no later than the end of April in the following year;
4. to agree that the role and functions of Jersey Enterprise should be absorbed into the Jersey Business Venture subject to the approval of the Board of the Jersey Business Venture;
5. to request  the  Minister  for  Economic  Development  to take  the necessary action to implement the proposals.

SENATOR A. BRECKON

REPORT

Members may have noticed a rather one-sided Report in the Jersey Evening Post of 25th August 2011; however, it does not tell the full story.

I became aware of the existence of the Jersey Business Venture (JBV) nearly 20 years ago when I was a member of the (then) Trade and Industry Committee, which was a Sub-Committee of the (then) Finance and Economics Committee.

Although the JBV was set up much earlier in the 1980s, as a voluntary initiative it has continued  to  play  an  active  part in  giving  independent advice to individuals  and businesses who may be seeking to "start-up" or have had some particular issue or problem, such as the use of technology, issues with rules and regulations, GST or ITIS, etc.

I believe that the JBV have provided an excellent value-for-money service for the annual grant they have received and have always punched well above their weight.

The JBV has received a great deal of positive feedback from the clients it has helped and supported over the years.

The Board Members of the JBV have given their time and experience freely and willingly, which I believe has made a valuable contribution to the local economy for around 30 years; their real life business experience and acumen has added value to so many others in or about to start a business combined with efforts of the staff of the JBV.

About Jersey Business Venture

Jersey Business Venture has been established for over 25 years, and since 1994 has received States funding to provide friendly, professional assistance and advice to those already  in  business,  or  thinking  of  setting  up  a  new  venture.  Operating  from  a One Stop Shop' at 33 Gloucester Street, St. Helier , JBV's services are confidential, practical, independent and free. Guidance and literature is available on statutory requirements, and they offer impartial objectivity in evaluating the viability of any new venture. JBV work to build long-term relationships with businesses, providing guidance at any stage along the way. With hands-on business experience and access to specialists, they are committed to providing the very best tailor-made support. Clients may walk in' between the hours of 9.00 a.m. and 5.00 p.m. Monday to Friday, or make an appointment at any time by telephoning 619222.

JBV  is  a  non-profit  organisation  which  receives  a  grant  from  the  Economic Development Department, but also relies on contributions from sponsors within the business community and benefits from strategic, voluntary input from private sector Board members.

A JBV office was first opened 17 years ago and (notwithstanding the duplication resulting from Jersey Enterprise (JE) opening a business advice arm in 2008 and targeting  many  of  JBV's  potential  clients)  the  client  appointments  increased significantly during 2009, and in 2010 remained at similar levels to those of the last 5 years.

In his Report for 2009, the Chairman, Mr. Bill Sarre, said this –

"With the economic climate for 2010 being somewhat uncertain and the need for  prudent  restraint  being  paramount,  the  JBV  is  well  placed  to  assist Economic & Business Development (EBD) and the States of Jersey in 2010.

Our  two  strongest  attributes  are,  firstly  high  quality  client  support  and secondly, excellent value for money. In 2010, these will be needed more than ever.

During the past few years, the JBV has gone from strength to strength with the support of EBD. We have now reached a position whereby we can offer a more  extended  and  rounded  service  to  our  clients  which  is  very  much appreciated and certainly required.

The  team  at  the  JBV  has  never  been  stronger  and  boasts  a  particular specialism in financial appraisals. These are often key to assessing a business proposal or indeed to explaining why a venture is experiencing difficulties.

With the banking system in a state of flux, we are seeing increasing requests by the banks for high quality business plans and financial appraisals. This is where the JBV is particularly effective. On average, this level of service is required  for  nearly  40%  of  our  clients  which  demonstrates  the  need  for qualified and commercially experienced staff.

In a small Island, the need for advice independent of government or even the private sector is strong and the JBV carries this off particularly well. Its great reputation is testament to quality of service over the years.

Currently, EBD have been tasked with assisting with the stimulus plan in 2010 and JBV will continue to play its part in helping EBD to achieve this. In that regard, I am pleased to report that we have referred 65 clients to EBD for various initiatives and further advice, in addition to EBD contact details being handed out in over 700 packs since the JE office opened in May 2008.

As an example of our prudence, our budget has been kept at the same level in 2010, the only difference is our rent which is likely to increase by around £4,000, but other than that, we propose to live within our means and the amount we were provided in 2009. Alas, we do not have control over the rent review,  and  indeed  the  increase  is  reflective  of  the  beneficial  deal  we originally negotiated, for which the JBV has benefited for three years.

We look forward to the challenges that will arise in 2010, and are confident that the JBV model can succeed in meeting them.

There  is  a  Board  of  Management  of  seven  people,  who  are  drawn  from banking, accounts retail, legal and the "sharp end" of industry. There is a combination of four part-time staff and board members get involved in an advisors capacity to staff and clients.

WHAT WE DO

At  JBV,  we  offer  free,  independent,  confidential,  practical  assistance  and advice to potential and existing businesses. At all times, we offer a friendly, welcoming, impartial service ensuring our clients feel comfortable to step through our door. Operating from our One Stop Shop' at 33 Gloucester Street,  St Helier,  JBV  offers  guidance  and  literature  on  a  wide  range  of business topics including statutory requirements.

During a normal week we are able to offer 25 private appointments from a team of 3 advisers. Over 40% of private appointments also had financial evaluations  or  cash  flow  forecast  assistance.  Utilisation  of  appointment times is currently running at 82% and interviews at September 09 have increased 66% on last year. Of the clients seen year to date 86% were in the retail,  catering,  building,  cleaning  and  similar  trades  with  only  14% representing the target market of the new Incubator service to be offered by Jersey Enterprise.

Established in 1994, contacts since that time have grown year on year with 782  in  1994  to  1,363  in  1998  and  2,409  in  2008  and  an  additional 2,603 website hits. We also have ongoing contact with over 1,000 established firms. The contacts in 2008 are made up of 623 clients walking into our office, 319 private appointments, 1,192 phone calls and 275 e-mail enquiries. Of the private appointments 71% were with new ventures and the remaining with clients established for more than a year.

The majority of clients we see are in trades such as retailing, hospitality, building,  agriculture,  hair  and  beauty,  fitness,  alternative  therapies  and cleaning. It is important that these sectors too have access to appropriate assistance  and  most  importantly  understand  the  implications  of  possibly investing their life savings into a venture.

Our independence and size, puts us in a unique position to help those who are cautious about entering States of Jersey premises to discuss their ideas. An impartial sounding board' is welcomed by our clients and our office is open from  9  to  5  when  clients  can  call  in  at  any  time  throughout  the  day. Additionally, early evening appointments are also available for those clients who need to visit outside business hours.

During their initial appointment, clients are talked through the business start up pack and given additional information relevant to their specific type of venture. With increased support on our front desk and assistance with general administration  duties,  we  are  now  able  to  offer  more  private  client appointments  at  this  important  early  stage  when  clients  are  considering setting up in business. It allows more time, without interruption, to understand their individual circumstances and proposed business from the outset. This enables us to tailor our advice more effectively, hence providing an overall enhanced level of service. With so many aspects to consider when starting a business in Jersey, we use simple procedures which guide the client through.

As previously mentioned, carrying out financial evaluations with the client continues to be a crucial role of JBV as assessing the viability in an impartial and objective manner may mean the difference between a client proceeding or

not. This is carried out either at the initial meeting, or clients are encouraged to book a subsequent one hour private appointment to clarify any matters and carry out financial evaluations and 2 hour bookings are held to assist with a business plan and cash flow forecast. With this guidance, clients are able to make an informed decision as to whether their proposal is viable or not. The decision not to pursue setting up a business that is clearly unviable can save a great deal of time, effort, money and heartache for all concerned which can result from the failure of a business; not to mention the drain on Government resources.

JBV  work  to  build  long-term  relationships  with  businesses,  providing guidance at any stage along the way. We operate a follow up process after each client's initial interview to find out how their plans are progressing and offer further support. We have access to a range of specialists through our voluntary Board Members and variety of Sponsors (as detailed on Pages 9- 12) and it is our aim to help our clients establish and grow businesses of value not only to themselves but, ultimately, the economy.

CLIENT CONTACTS

The level of client contact since the opening of the one-stop shop fifteen years ago has increased year on year, rising from 782 in 1994 to 1,363 in 1998 and as  detailed  below  2,409  in  2008.  During  the  first  6 months  of  2009 appointments have increased 70% on the same period last year.

Half Year

2009  2008  2007  2006  2005

Initial Interviews Subsequent Interviews

Start Up Pack Consultations General Enquiries

CONTACTS

Website visits Newsletters sent TOTAL CONTACTS

119   167  176 116   152  123 185   388   466 811   1,702  1,593

1,231   2,409  2,358 1,425   2,603  2,134

548   289  

3,204   5,301  4,492

212  298 170  123 466  432 1,334  979

2,182  1,832 2,486  2,591 4,668  4,423

With full time staff cover on our front desk, we are able to offer additional appointments for clients in our private meeting room throughout the day, providing an increasingly effective service and enhanced confidentiality which is  so  important,  particularly  for  early  stage  business  start  ups.  Client appointments have indeed increased by 70% in the year to date, as you will see from our bi-monthly Update reports previously forwarded to you.

An analysis of the cost per client according to our 2010 budget would for example be:-

840 Financials, Interviews & Consultations @ £120 each = 100,800 1600 Enquiries @ £25 each = £40,000

TOTAL £140,800

This does not include the other benefits such as our website, newsletters, source  of  information,  referrals  to  EBD,  Government  Consultation responses from ourselves and our clients and Educational talks to various local students.

BUDGET 2010/BUDGET 2009/ACTUAL 2008

Budget  Budget  Actual 2010  2009  2008

Notes

Income

States Grant  134,000 EDD – Additional Staffing- 6mths

Sponsorships received  7,000 Bank interest  300 Moving Grant  - Total Income  141,300

130,000  108,000

9,000  8,500 1,000  727 6,689  6,689 146,689  123,916

Expenditure

Administration  1 Salaries

Rent  4 Heat & Light  2 Insurance  1 Advertising and promotion

Sundry expenses  1 Depreciation  3

8,346  6,000  7,137 100,242  100,242  84,714 23,376  19,480  19,480 1,878  1,440  1,263 2,470  1,700  1,717 2,000  4,000  828 4,249  3,300  5,455

-  8,439  8,551

Total Expenditure  142,561  144,601  129,145 Surplus / (Deficit)  (1,261)  (2,088)  (5,229)

Notes to Accounts:-

1. Reflects 5% Increase on 2009 year end projections.
2. 10% Increase to 2009 projection.
3. Items purchased were depreciated in accordance with lease terms.
4. Rental Increase – open market review in 2010."

____________________________________________________________________  The JBV has proved its worth and I believe if should be supported in the future to be this truly independent (but in receipt of a States Grant, presently £130,000 per annum) source of advice and assistance.

My reason for bringing this Proposition is that I have a very real concern that Jersey Enterprise is duplicating the work and role already adequately done by the JBV, and also applying undue pressure because Economic Development hold the purse-strings, the awarding of the annual grant.

I have produced for information some extracts from Business Plans going back to 2007, and to me it all looks pretty much "copy and paste" – more of the same, however,  JE's  budget  has  been  between  £1.5 – £2.5 million  and  JBV's  has  been around £130,000.

I believe the way forward is for the JBV to be the agent/provider and not Jersey Enterprise.

My Proposition is that the Jersey Business Venture would have a Business Planning process, (as now) a Reporting and Accountability structure (as now) and I believe it would  provide  the  best  way  forward,  with  a  proven  track  record  and  excellent value-for-money, and then the JE can fade away and its role and functions can be subsumed, where appropriate, with the JBV. This is my understanding of how the States can work best in partnership with trade and industry.

In 2010, Jersey Enterprise claims to have supported 2,650 organisations, which they claim has resulted in the creation of 625 new businesses and 1,545 jobs – I believe that these statistics require further evidence, which I am unable to find at the time of writing this Report.

Extracts from Business Plans:-

Economic Development – 2007/2011

Service Analysis – Objective and Performance Measures

Strategic Plan Initiatives

1.5.1  Develop and implement an Enterprise and Business Development Strategy that will:-

• Provide a customer services centre for businesses by 2007 (ED)
• Introduce in 2006 products and programmes to remove the main barrier to enterprise,  including  establishing  a Jersey  Business  Angel  Network,  a

Small  Firms  Loan  Guarantee  Scheme,  an  enhanced  Business  Advice Service, access to venture capital, development of enterprise skills and a business incubator (ED)

• Build  strategic  partnership  between  secondary  schools  and  Highlands College, Jersey Business School, Chamber of Commerce, British Venture Capital Association, local financial institutions, professional associations, Jersey Business Angel Network and government departments (ED)

2008

Minister's Introduction

The Enterprise and Business Development Strategy will continue to be a key element in achieving our growth targets. The strategy has three aims:

• Increasing the rate of business start ups and growth.
• Development international trade and inward investment.
• Encouraging commitment and investment into work related skills training.

Aim:

Objective 2:  New  enterprise  and  companies  with  high  value-added  potential developed.

Performance/success criteria:

1. The Business and Enterprise Strategy implemented.
2. Increased  number  of  business  start-ups  with  high  value-added potential.
3. Increased business success defined by % of start ups still trading after three years.
4. Increased  number  of  high  value-added  businesses  and  individual migrating to the Island.

Strategic Plan Commitment (s): 1.4, 1.5, 1.6 and 1.7.

Moving on to the 2011 Business Plan, Minister Alan Maclean had this to say –

The Enterprise and Business Development Strategy, delivered by Jersey Enterprise will continue to be a key element in achieving our growth targets. The strategy has three aims:

1. Increasing  the  rate  of  business  growth  and  the  number  of  start-ups  and growth  through  a  dedicated  team  of  business  advisors.  Jersey  Enterprise provides funds to Jersey Business Venture to provide certain services in this area. However, in 2011 I hope the two organizations can move to a closer integration of their activities and move towards the development of a single service for enterprise and business development in Jersey.

2. Developing international trade development and inward investment across all sectors with additional focus on emerging sectors such as renewable energy (RE)  where  a  group  led  by  the  Constable  of   Grouville  has  provided  an excellent foundation for the development of tidal stream RE in the Island's waters to meet our longer term need for security of supply and sustainability, EDD will be working closely with Constable Murphy's group and the new Energy policy being developed by P&E to exploit the potential development of wind and tidal stream RE during 2011.
3. Working with the Skills Executive to encourage commitment and investment into work related skills training.

2012 Aim:-

Summary of Key Objectives and Success Criteria

Objective 2: Attract and help to develop new enterprises and companies with high value-added potential

Success criteria:

1. Increased  number  of  business  start-ups  with  high  value-added potential.
2. Increased business success defined by % of start ups still trading after three years.
3. Increased  number  of  high  value-added  businesses  and  individuals migrating to the Island.

Strategic Plan Priority: 1, 2 and 4.

Notice how most of the success criteria for 2012 has been "copy and paste" from 2008.

* Investment & Diversification restated to include Bureau de Jersey grant of £65,000 (2011)

The reduction for Enterprise and Business Development mainly relates to a reduction in business grants in line with CSR savings. There was a slight increase due to the transfer of Bureau de Jersey grant (£65k) transferred from the Tourism budget.

____________________________________________________________________ Looking at the above facts and figures, a few things emerge –

1. It looks as if it's usually "copy and paste" from previous years.
2. The emergence of Jersey Enterprise and its role/functions is not either clear or measurable.
3. Jersey Business Venture offers value for money and an excellent level of service over many years.

Financial and manpower implications

I have no doubt whatever that the Jersey Business Venture can deliver a more efficient service on an "Agency Basis" subject to checks and balances. It is not difficult to see where at least £1 million per year can be saved.

Any  reduction in public  sector  manpower should  be  handled  through  appropriate channels.