Sinclair operates from a two-story brick building in an industrial park in the East Anglia city of Norwich. The company manufactures and installs high-speed machines that label pieces of fruit as they roll along packing plant conveyer belts. It also makes the superthin labels for Sunkist, Chiquita, and many other brands.
Just four years old, Sinclair already has 1,000 machines in place around the world. It leases the machines to packers and makes its money on the sale of the labels. Revenues last year topped $6 million, all from overseas. The company employs 40 people. And according to Gervas Steele, an attorney who serves as chairman of the board, none of it would have been possible without the Basildon Fund of Dennis Fredjohn, fueled with BES capital. Sinclair got off the ground with about $1.3 million, sacrificing 56% of the equity.
"In the U.K., the BES has changed the atmosphere in business circles," says Steele. "Suddenly, everybody was keen to invest in start-up companies. In subsequent years, when we needed to raise additional capital and have fairly sophisticated banking facilities, we were talking to bankers in the right atmosphere. They were suddenly open to new ideas."
The Thatcher government has also launched the Enterprise Initiative, which provides government-subsidized consulting services in areas in which small companies often lack know-how -- marketing, design, quality control, and manufacturing technology. Budgeted at almost $100 million this year, the program pays half the cost of a 5- to 15-day consultancy, or two-thirds the cost in specially designated "assisted areas." Plans call for as many as 15,000 consultancies a year.
The underlying idea is to put some management muscle on Britain's burgeoning small-business sector to help it survive 1992. That's when the 12 nations of the European Community merge into one giant market, much like the United States. They will sweep away regulations, varying technical standards and other obstacles to unimpeded trade. The fear is that small, unsophisticated companies, no longer able to hide behind protectionist policies, will be eaten alive by the big boys.
At the same time, however, the new Common Market will present many opportunities. Sophie Mirman, for one, is looking forward to it. "It will make it so much easier to trade in Europe," she says. "There will be a lot less bureaucracy and paperwork involved."
* * *
Many Britons are enthused about the Iron Lady's economic policies, but a strong undercurrent of dissatisfaction exists, too. New social conflicts are in evidence (see "The Dark Side of Thatcherism," page 6), and not even all businesspeople are happy about the direction of economic change. Each new policy direction affects small companies and large companies in different ways; and, as is the case in the United States, many policymakers don't understand the critical difference between traditional small businesses and those that grow quickly and create jobs.
"They talk about the enterprise culture, but I think what has not gotten through is the difference between small business and new ventures," says John Bates, founder and chairman of Datapaq Ltd., a three-year-old business in Cambridge that makes computerized control systems for industry. This year, Datapaq projects sales of $5 million. "Most politicians in this country still think of small business as corner newsstands, shopkeepers, and garages -- low-capital retail operations."
Recently, he points out, the government raised the capital-gains tax from 30% to 40%. "That's probably the worst thing you could hope to see from the standpoint of new ventures," he says. "The capital-gains rate is now the same as the top income-tax rate, so there is no advantage in working for capital gains. You might as well just rip it out in earnings. It's fine to treat capital gains on speculation as income, but not when you are trying to start businesses."
Bates located his company in Cambridge, which in many ways is a microcosm of the old and the new in Britain. The medieval spires of King's College Chapel rise over the narrow streets, filled with bicyclists and lined with bookstores and pubs. The Cam River, fringed with willows, curves around the town. Boating and cricket are popular pastimes. Cambridge denizens speak reverently of the school's distinguished alumni, including Sir Isaac Newtion, Oliver Cromwell, and, more recently, Prince Charles. It is the Britain of wealth and privilege -- and a centuries-old disdain for commerce.
On the other hand, more than 400 young technology companies call Cambridge home. And just a few miles out of town, the Cambridge Science Park hosts 70 more fast-growth businesses. These companies are engaged in frontier work in lasers, computers, and biotechnology. And since the university's Trinity College actually owns the park, it promotes intellectual links of all kinds. It gives the companies access, for instance, to the world-class brainpower at Cavendish Laboratory and its department of molecular biology, breeding grounds for Nobel laureates.
Robin J. Smith-Saville, himself a former physics professor, has worked at the Science Park since 1979. His company, Signal Processors Ltd., makes products used in satellite ground stations.
Though the company is only six years old, it has grown by an average of 40% annually and expects to reach about $4 million in sales this year. A third of its sales are exports. In some ways, the company is another product of Thatcher's enterprise culture. It started with a government-guaranteed bank loan, and Smith-Saville hopes to go public on the USM. But it would be wrong, he says, to assume that all of Thatcher's reforms have helped small companies.
He mentions the severe cutback of government-supported research and development. "In one way, it's fine," he says. "British industry should learn to rely on itself. However, in the telecommunications business, we go up against competitors -- Japan, for example -- that enjoy very large subsidies. They can help you eliminate a lot of risk at government expense. So come 1992, technology companies in the U.K. could be in for a tough time."
