Small businesses need a boost, not a battering

Start-up and small business Autumn Statement recommendations

Ideas to support the UK’s start-ups, micro and small businesses to survive and grow and make sure they are strong, resilient and adequately supported.

“What small businesses need from Government is a confidence boost and to feel supported enough to grow their economic performance in the context of our modern economy. They need to be ready for the changes to come and should not be locked out of Government thinking.”

“As we head into the most challenging macroeconomic environment for decades, small businesses will need access to quality guidance and support including enhanced access to their local leader led peer groups and dynamic access to find a mentor or trusted adviser to help them navigate the coming months.

“Heading into the busiest quarter of the year for product and food and drink businesses, our latest small business barometer shows that businesses are already working longer hours and taking fewer holidays to cope with inflationary pressures. They are already flagging.

“Start-ups and micro businesses are vital to future-proof the economy and they tell us they are putting off growth plans. The Government must recognise that this is a risk to innovation and the economy now and into the future. What we need is for businesses to feel championed and celebrated by government which will offer a confidence boost, and then to access the right support for their type of business, which doesn’t all have to be funded by government.

“Heading as we are into a difficult trading environment, business owners need access to support to increase their skill set and build sustainable businesses.

“We think existing programmes like Help to Grow: Management, mentoring, planning advice and a programme of tailored support, will be a lifeline for many businesses unsure of their options, supercharging strong leadership at a time when we need it most.

"These courses and mentorship can help firms build on the areas of business they can control and learn to manage the things that they can't, such as increased costs.

“But not all support needs to be financed by government as the private sector has ably stepped up over the past few years with major corporates from banks to tech giants offering small business grants, training programmes and mentorship. Accountants and book-keepers continue to play a vital role in being trusted business advisers to small firms.

The most important role government can play is in championing enterprise. This involves celebrating those who decide to start and grow their own enterprise and ensuring they have a supportive environment in which to trade. It is this championing and confidence boost that we so desperately need to see at a time when the economy needs small businesses to perform at their best."

Recommendations

1.????Supercharge support

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 which offer access to learning, experienced mentors should be maintained as they have 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. As we head into a recession, courses like this will be vital to ensure small businesses can adapt to a different trading environment.

2.????Unleash cashflow

Sort out late payment once and for all. Around 65% of invoices to small businesses were paid late in May, according to a study from Intuit , with an average of ￡22,700 per business outstanding. 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.

3.????Invest directly

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 sub-contractors would help. It is small and nimble businesses that will inject new ideas and innovation into contracts including energy-saving

4.????Become cheerleaders

• Make it clear that the Government backs small businesses. A supportive culture that champions the role the 5.5 million small businesses play in the economy is one that sees the most progress and support from entrepreneurs. Ruling out an online sales tax at this point could help to demonstrate this. The tax may be applied to large platforms, but an unintended consequence will be that the burden is passed to thousands of small firms using platforms to trade, so increasing the already rocketing cost of doing business.
• Publish the Entrepreneurship strategy. ?Recognise the positive surge in start-ups and reflect how government policies in areas 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.?
• 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.

5.????Boost workforce

• Support unemployed and the ‘unretired’ into 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 over the summer. Many more are ‘unretiring’, retraining and launching their own business, the Government should consider adding unretired eligibility to the Re-Start scheme.
• Increase investment in the regional skills base. Many towns and cities feel locked out of the power to grow cycle in our modern economy. One way of tackling this could be to offer tax breaks to regional businesses that invest in upskilling their workforce. Our most recent 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.

6.????Open doors

Unleash an export boom.?Small businesses have put international trade on hold. It’s time to get exporting and Go Global and government can enable this through re-introducing programmes such as Tradeshow Access and launching Export Vouchers that enable small businesses to get advice from an export specialist with match funding of their own.

7.????Simplify taxation

• Reverse NI rise. Increasing taxes on businesses in the current climate deters small firms from employing the additional staff they need to grow their business.
• Rethink 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.
• Bring back temporary COVID-style VAT reductions. For industries such as food and drink, a reduction to around six per cent could make a significant difference. Our most recent Barometer found those in the food and drink sector were already struggling the most from inflationary pressures.

8.????Unleash investment

• Scrap the sunset clause for key investment schemes. Scrapping the sunset clause which means they expire in 2025, for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) and remove the need for Advanced Assurance for Seed Enterprise Investment Scheme (SEIS) will help entrepreneurs to scale and innovate.
• Reform the pension charge cap. Unleash a fresh form of investment for start-ups from UK pension funds, giving everyone of all ages an incentive to back British business. This in turn could help support pioneering firms that are creating new ways to create renewable energy or use less energy to achieve the same or greater results, contributing to long-term energy independence for the UK.

Enterprise Nation will be running live coverage of the Autumn Statement on 17 November with an online panel of business owners and experts sharing instant reaction. Stay updated.