With the Spring Budget later this month, small business membership organisation Enterprise Nation is calling on Chancellor Jeremy Hunt to listen to the 5.5 m-strong start-up, micro and small business community and bring forward policies that will turbocharge the economy, reverse plans to hike Corporation taxes and fairly support all entrepreneurs, not just the few.
The company says focusing on policies like making the UK the next Silicon Valley ignores most SMEs, who also want support to grow and prosper.
T2022 was another record year for company registrations in the UK. Amidst the doom and gloom, the British enthusiasm for entrepreneurship continues to grow.
According to data published last month 784,762 businesses were registered at Companies House, that’s almost 30,000 more than in 2021 and 114,000 more recorded annually pre-pandemic. In 2019 670,575 businesses were registered.
These start-ups and early-stage firms need the Government to champion their work, ensure they can get access to the investment they need – and drive economic growth for the UK so they can find customers both here and overseas.
Emma Jones, founder, and CEO of Enterprise Nation, said: “Entrepreneurs want to see the Government championing their work, recognising the great value they add to the economy and making sure they have access to the support and funding they need to grow.
“Entrepreneurship policy matters. At a time when businesses are dealing with increasing costs, staff shortages and facing tax hikes, we need the Chancellor to turbocharge the small business economy by pushing froward with practical growth plans that include access to new markets.”
The organisation recommended building on the Chancellor’s own four pillars of Enterprise, Education, Employment and Everywhere to stimulate UK-wide growth.
Enterprise
To grow, start-ups and early-stage small businesses need access to affordable funding, to life-changing contracts such as those with Government, access to new markets and to getting paid on time.
· Sort out late payment once and for all. Small businesses are feeling the impact of rising energy costs and inflation, with many resisting putting up their costs but working longer hours to compensate. Being paid late only adds to this crunch in finances. One thing that is in the gift of the Government is to ensure businesses get paid on time for what they do. Around 65% of invoices to small businesses were paid late in May 2022, according to a study from Intuit, with an average of £22,700 per business outstanding. Enterprise Nation’s own research found a fifth (24%) of small firms are often paid late and another 23 per cent are sometimes paid late. Make it easier for the Small Business Commissioner to tackle large businesses that delay payment and make clearer recommendations to small businesses to ensure they invoice with clear terms and charge interest to those that pay late. Consider the recent measures from the Dutch Government to mandate 30-day terms to larger firms procuring from smaller ones.
· Reversing plans to hike Corporation taxes – the sliding scale of the marginal rate means firms that make more than £50K in profit are already impacted by high taxation. Experts point to the fact that incremental increases can attract up to 26.3 % in tax. Our members tell us the increased taxation on profit is misunderstanding the small business mindset and risks not only deterring expansion, but also overseas investment at a time when the economy needs to see dramatic growth.
· Increase Government spending with small businesses. Our report Access All Areas: Government found that despite the ambition to spend 25 per cent of its procurement budget directly with small firms, the Government has only so far managed to spend 10 per cent. Leveraging technology by connecting government’s tier one suppliers to suitable digital sub-contractors would help. It is small and nimble businesses that will inject new ideas and innovation into contracts. We recently ran a series of events with Deloitte in London and Manchester to introduce and recruit agile tech firms already innovating in AI and sustainable systems, to subcontract with large suppliers. This could easily be extended across the UK to include other key Government providers such as Siemens and Sodexo.
· Unleash an export boom. Small businesses have put international trade on hold. It’s time to get exporting and Go Global and government could consider launching an Export Vouchers campaign or re-introducing the Internationalisation Fund, that closed in January, to enable small businesses to get advice from an export specialist with match funding of their own.
Education
· Maintain continuity. Chopping and changing business support programmes causes confusion and can lead to business owners dis-engaging as they cannot keep track of the programmes for which they are eligible. Existing initiatives such as Help to Grow: Management which offers access to learning and experienced mentors should be maintained as it has started to gain traction. They should be iterated to respond to small business needs and supercharged with support from the private sector to ensure they become well known and highly adopted, with effective measurement of results to inform future programmes and policy.
· Make it clear that the Government backs small businesses. A supportive culture that champions the role the 5.5m small businesses play in the economy, not just the 30,000 scale ups, is one that sees the most progress and support from entrepreneurs from the classroom to the boardroom. This can only start with Government itself.
Employment
· Support the over 50s and the ‘unretired’ into employment and self-employment. Unemployment is expected to rise yet there is no dedicated programme to support a move from unemployment into self-employment since the New Enterprise Allowance scheme was scrapped. The Department for Work and Pensions should consider reviewing the self-employment targets for the Restart programme so the focus is rebalanced from finding people jobs to supporting people to create their own. Recent ONS stats from the Over 50s Lifestyle Survey found the number of over 65s in work hit 1.5m in 2022. Many more are ‘unretiring’, retraining and launching their own business. According to Enterprise Nation’s Q4 2022 Barometer, around a third (35%) of small businesses are new started by people in their late 40s onwards. The Government should consider working with the private sector and established groups in the mature employment sector to form a consortium to support entrepreneurs and attract this talent back into small and large businesses alike.
Everywhere
· Increase investment in the regional skills base. Many small businesses can’t find the skills they need in their local area, which impacts their local economy. One way of tackling this could be to offer tax breaks to regional businesses that actively invest in upskilling their workforce. Enterprise Nation’s Small Business Barometer exposed wide regional differences in growth ambitions, with almost half (45%) of businesses in the East of England expecting to shrink in the next quarter compared to the West Midlands where half (49%) expect to grow. Access to skilled employees is a big part of the growth picture.
· Publish the entrepreneurship strategy. Recognise the positive surge in start-ups and reflect how government policies in investment zones from finance to housing can create positive conditions to start a business from home, a co-working space and leverage efficient broadband and transport infrastructure to sell well at home and overseas. The strategy was put on hold by Kwasi Kwarteng.
· Engage with small business groups. 96 per cent of the UK’s businesses are diverse, small micro businesses and start-ups. We’d like to see this group represented at the highest level in government at regular meetings in the same way that the Government engages with organisations that represent larger businesses.
