Figures Do Not Balance

Annual reports for 1997, 1998 and 1999, by John Emmins (pictured), FSB director and Recruitment & Membership Committee Chairman, show apparent discrepancies which total over £1.40m; being £0.40m, £0.50m and £0.50m for the respective years. Facts to support the discrepancies are shown below.

Reported Membership

The 1998 annual report by FSB director / Company Secretary / National Secretary, David Dexter (pictured), boasted an FSB membership of 128,000 and rising. As far back as the 1997 FSB annual report, FSB directors boasted a membership in excess of 110,000. The 1999 the FSB annual report boasted 150,000 members.

Membership Magazine Circulation
(monitored (By Audit Bureau Circulation)

The FSB establishment claims credibility to represent small businesses by virtue of the level of its membership.

If you can fathom the mysteries of numbers then please look through the following analysis of membership 'fiction' as reported by three elected FSB officers.

The result of that closer look at the FSB's "members-tsar's" report is outlined below.

• New Members In Year to 30 Sep 97
  

  In his report for the year to 30 September 1997 the Recruitment Chairman reported that 24,898 new members had joined the FSB during the year. He added that continued equivalent growth would enable the FSB 'Finance Director' (National Treasurer) Gordon Catto to maintain the FSBs modest subscription.

  Note
  Twelve months later inspite of reported improvement in membership, amidst 'quiet protest from the lower-ranks', Gordon Catto, FSB 'Finance Director' (National Treasurer), obtained approval from the FSB establishment 17% increase in the annual subscription rate!

• Total Membership At 30 Sep 97
  

  The FSB National Secretary's report stated a 17% membership increase from which it was calculated that the membership at 30 September 1996 was 94,000.

  Adding 24,898 new members to the 94,000 members at 30 September 1996 should amount to 118,898 members but after member-drop-out, the FSB Recruitment Chairman was able to report membership 'in excess' of 110,000 'at the time of writing his report'(?).

• Actual Member Drop-Out Figure?
  
  

  It has to be assumed that the number of members who left the FSB was; 118,898 minus 110,000 to give, 8,898

• But What Member-Drop-Out Does FSB Membership State ?
  

  The FSB Recruitment Chairman reported that the FSB had achieved a member-retention rate of 83.5% from which a member-drop-out rate of 16.5% was deduced.

  BUT 16.5% of which figure, cries every FSB member; bar one. Thus the arithmetic problems begun. The sums did not appear to add-up!

• Money Value of Member Drop-Out Discrepancy
  

  16.5% of 94,000 is equal to 15,510 and that is 6,612 greater than the greater than the 8,898 calculated above. In money terms, the 6,612 difference, the at say, £60 per member (the then single-member subscription fee), equates to possible revenue of £ 0.40million

  16.5% of 24,898 new members, was equal to 4,108 and that would have been 4,790 less than the 8,898 figure calculated above. At say, £60 per member, the drop-out variance represents represents £ 0.29 million

The observations about the "members-tsar's" report are shown below.

• New Members In Year to 30 Sep 98
  

  In his report for the year to 30 September 1998 the Recruitment Director reported quite precisely, that 27,901 new members had joined the FSB during the year. He added that without membership-drop-out, renewal subscriptions for those new members would have equated to £ 2,371,585   

  Note
  The new-members figures immediately above, indicate an annual membership subscription average of £85 per member.

• Total Membership At 30 Sep 98
  

  Adding 27,901 new members to the 110,000 members at 30 September 1997 should amount to 137,901 members but after member-drop-out, the Recruitment Director was able to report membership 'in excess' of 127,000 'at the time of writing his report'(?).

• Actual Member Drop-Out Figure?
  

  It has to be assumed that the number of members who left the FSB was; 137,901 minus 127,000 to give, 10,901

• What Is The Recruitment Director's Drop-Out Figure?
  

  All would be fine except that the Recruitment Director further reported that the FSB's member retention rate had improved by 1% from the 1997 rate. In 1997 he had reported a retention rate of 83.5%. For 1998 a retention rate of 84.5% and a member drop-out rate of 15.5% had to be assumed.

  AGAIN 15.5% of which figure, cries every FSB member; sorry, bar one. The numeric discrepancies in the Recruitment Director's reports continued. The sums still did not appear to add-up!

• What Drop Does The FSB National Chairman's Report
  

  15.5% of 110,000 is equal to 17,050; being 6,149 greater than the 10,901 calculated above. In money terms, the 6,149 difference, the at say, £85 per member, equated to £ 0.52million

  15.5% of 27,901 new members, was equal to 4,324 which was 6,577 less than the 10,901 figure calculated above. The difference figure, at say, £85 per member amounted to possible revenue of £ 0.56million

With so much computer power at his disposal, one would expect the "members-tsar's" to be on the ball with his membership figures, but it appeared that his figures did not stand-up. Perhaps the figures needed a good massage, and here follows the pointers to that opinion.

• New Members In Year to 30 Sep 99
  

  In his report for the year to 30 September 1999 the Committee Chairman reported that 35,000 new members had joined the FSB during the year.

• Total Membership At 30 Sep 99
  

  Adding 35,000 new members to the 127,000 members at 30 September 1998 should amount to 162,000 members but after member-drop-out, the Committee Chairman was able to report membership of 150,000 'at the time of writing his report'(?).

• Actual Member Drop-Out Figure?
  

  It has to be assumed that the number of members who left the FSB was; 162,000 minus 150,000 to give, 12,000

  In contrast to his complacent report for the year to 30 September 1999, FSB director and National Chairman, Ian Handford, should be asked to answer two glaring questions;

  • "Why have over 31,799 members left the FSB during the past three years, (as indicate by the reports of his Recruitment Director John Emmins.

  • "What are the successful FSB recruiters selling to new members that existing FSB members are not aware of?

• What Is The Committee Chairman's Drop-Out Figure?
  

  In his report the Committee Chairman stated that the loss in the first year of membership had improved to 21% the report did not state 21% of what, nor was 'first year membership' defined. Members were thus left to assume an improvement on the 1998 member retention-rate of 84.5% by, say 1%, to a retention rate of 85.5% and a member drop-out rate of 14.5% had to be assumed.

  BUT 14.5% of which figure, again cries every FSB member; bar one.

  The arithmetic discrepancies slithered on because the Committee Chairma's figures still did not appear to add-up!

• Two Guesses At The Chairman's Drop-Out Figure
  

  14.5% of 127,000 is equal to 18,415; being 6,415 greater than the 12,000 calculated above. In money terms, the 6,415 difference, the at say, £85 per member, equates to £ 0.54million.

  14.5% of 35,000 new members, was equal to 5,075 and that was 6,925 less than the 12,000 figure calculated above. The difference, at say, £85 per member represented possible revenue of £ 0.56million

For ethical and commercial reasons the Federation's membership figures have to be certain. The following count among those who have a right to information which stands up to scrutiny:

• advertisers in FSB publications;

• MPs and Government courted by the FSB;

• Government Ministers who sometimes make statements which give status to the reported FSB membership claims;

• non-government organisations lobbied by the FSB;

• competing organisations which lobby for UK businesses;

• the public at large, and last but not least;

• and importantly, FSB members, some of whom use the FSB logo commercially.

Will the Government Ministers who have allowed their names to be associated with the reported FSB membership figures, now direct their new Small Business Service, to invite FSB officers to openly clarify the inconsistencies in their reports of membership?

The FSB's annual Policy Report also begs closer scrutiny. The report claims FSB successes on a number of issues which the facts and figures in the accounts do not clearly support ...

Since in 1999 the FSB took in over £12 million in subscriptions, the spending of high budget FSB committees, such as the policy committees have to be transparent, duly audited and open to scrutiny by members.