Tuesday, 30 September 2008

Facing the Consequences of Your Actions

When I've gone to my bank for financial support, like all small business owners, I have been asked to give personal guarantees and to put my house on the line. As the banks ask for financial support, perhaps they should face the same terms that they give out. Imagine how it would concentrate their minds if they knew they could lose it all.

The government claims to be on the side of small business and the entrepreneur. But its a funny thing that the only people who stand to lose their home if they make a mistake (or often when they don't, but are hit by things outside their control) are small business owners.

Chancellors can be personally responsible for losing billions and not lose a penny. (Lamont's £10 billion lost in the ERM collapse comes to mind as does the £2 billion lost by Gordon Brown in the Tube Lines fiasco.) Bank directors can bring great institutions to their knees and not be penalised. Indeed they hang onto the huge bonuses of past years and, often, get an bonus for departing the sinking ship. Even convicted criminals are unlikely to lose their house.

Only entrepreneurs are told that we should face the consequences of our actions in terms of personal loss.

And, of course, it won't be those responsible who pay the price now. It will be front-line staff who face the sack. It will be small businesses who have the plug pulled by anxious banks. Even as I write there are probably bank managers working out which part of the month is the best time to pull the overdraft to make sure the bank gets its money, and never mind a consequences.

As small business people get together, there is one refrain on which we all agree and on which we all have bitter experience: Never trust a bank.