The election of the Conservative government in May was followed by their pledges to provide more help and support for small businesses through a range of policy changes, appointments and initiatives. Four months on, which are proving to be the most pertinent?
One that created a stir among small firms was the consultation into the small business commissioner role, which will help firms tackle the issue of the billions of pounds in late payments for goods and services.
Sean Mallon, CEO of Bizdaq, an online platform for selling businesses, is one of many business leaders to welcome the announcement. However, given the scale of the late payment problem, with over 55% of all small firms waiting more than 30 days to be paid, he has yet to be convinced that the small business commissioner will have the resources available to really tackle the problem.
He says: “I have seen many business owners struggling to maintain cash flow due to the problems caused by large organisations taking three months to pay invoices. This often causes them to simply wind up their businesses as their company simply runs out of cash.
“Presently, there is nobody fighting the corner of small businesses and really taking on the large organisations to improve payment conditions. It’s a classic case of corporates bullying important stakeholders – many of them feel that the small and micro businesses are dispensable. This must change if we are to continue to be a nation of small and micro businesses.”
David Vine, managing director of UK SMB at Concur sees the small business commissioner role has having the potential to make a real difference, if it is done well.
“It’s a difficult one to predict and will depend on what power the commissioner has,” he says. “It could come down to the actual individual in the role and how willing they are to stand up for SMEs, which might require them to take large companies to task over poor practices.”
Whether through the commissioner role or other policies, Vine sees a need for more education.
He adds: “SME’s need information and support on difficult issues, such as how to work effectively with larger companies, and negotiate contracts. It would make a huge difference to have someone on their side along with an armoury of knowledge to help them through the red tape.”
Another key appointment was that of entrepreneur Michelle Mone as David Cameron’s business advisor, who plans to carry out a review into opening startups in disadvantaged areas.
Nick Hungerford, founder and CEO of investment firm Nutmeg says: “We are optimistic about the government’s new appointments. The commissioner will be a welcome ally to SMEs, especially since power imbalances between small and large businesses can be a daunting barrier to new entrepreneurs. However, Michelle Mone’s review could bring valuable insight, but only if the findings are actually acted upon.”
However, Jill Barnes, CEO of Exemplas, which works with startups, believes the Government should be looking at the support that is generally available to help all new start businesses.
She says: “Many startups find it difficult to wade through the myriad of information available and the availability of access to advice is very patchy across the country. This lack of access to advice is not only frustrating for the individuals concerned but it also puts them at risk of making ill informed decisions about their business resulting in unnecessary failures which can’t be good for the economy.”
Sunday trading came in for a shake up during the Chancellor’s Budget speech when he effectively handed responsibility for Sunday trading laws in England and Wales to towns and cities, allowing them to decide how long shops can stay open.
While this may initially seem like a win for retail businesses, they also need to be aware of the additional costs that come with this change, said Helen Grimberg, head of corporate at BLM.
She says: “Costs in terms of employing more staff are obvious, but it’s easy to forget about costs associated with increased insurance premiums and the risk landscape. Longer trading hours will no doubt result in more employees and customers, and therefore inevitably a greater risk of accidents and insurance claims.
“Retailers may also be put in a difficult position when thinking about which staff will cover additional shifts – extending working hours of current employees, rather than employing additional employees, could lead to low employee satisfaction and increased stress risk. This, coupled with changes to contract terms and working practices could lead to an increased number of employers’ liability claims.”
Elsewhere, the government’s commitment to the UK’s burgeoning fintech (finance technology) sector has been a cause for celebration.
Luis Carranza, founder of Fintech Week says: “Fintech startups need all the help they can get. Much focus has been put on ‘Silicon Roundabout’ – London’s answer to Silicon Valley, which broadly incorporates the tech sector but with little attention given to fintech, the less glamorous subset.
“Thankfully, tax incentives like the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) will help growth by encouraging entrepreneurs to take a leap into the unknown. Support through Innovate Finance and the UKTI are also highly visible signs that the UK government cares about nurturing fintech startups.”
Nick Hungerford said it was exciting to have Eileen Burbidge championing fintech in the government, and as a result hoped some real changes would be made in matters as deep as education policy.
He says: “Students need more than a nudge to study STEM subjects, and slashing costs of degrees like Maths and Engineering would be an incentive and a signal that when it comes to technology, Britain means business.”
Other key policy changes made by the Conservatives have included a relaxing of the ban on assignment of invoices.
“The so-called ‘ban on assignment’ rules prevented SMEs from using invoice finance as a source of funding, hampering the growth of small business, says Tracy Ewen, managing director of IGF Invoice Finance.
“Relaxing the ban has been a positive step towards removing barriers to accessing credit and opened up additional sources of finance to all businesses. With 29% of SMEs wanting to explore invoice financing as a credit option in the next financial year, the government now needs to be more proactive in promoting alternative finance to encourage increased borrowing and growth.”
Content on this page is paid for and produced to a brief agreed with Kia Fleet, sponsor of the Guardian Small Business Network Accessing Expertise hub.
