Posted: Fri 11th Nov 2022
Ahead of the government's critical Autumn Statement on 17 November, Enterprise Nation founder Emma Jones shares ideas to help the UK's start-ups, micro and small businesses to survive and grow and make sure they're strong, resilient and adequately supported.
Access to guidance and support
As we move into the most challenging macroeconomic environment for decades, small businesses will need access to high-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 business owners are 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're putting off plans for growth. 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 government-funded.
Heading as we are into a difficult trading environment, business owners need access to support to increase their skillsets 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 government-financed, as the private sector has ably stepped up over the past few years. Major corporates from banks to tech giants have offered small business grants, training programmes and mentorship. Accountants and bookkeepers continue to play a vital role as trusted business advisers to small firms.
The most important role government can play is in championing enterprise. This involves celebrating those people who decide to start and grow their own business and making sure 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 for the 2022 Autumn Statement
1. Supercharge support
Chopping and changing business support programmes causes confusion and can cause business owners to disengage because they can't keep track of the programmes for which they are eligible.
Existing initiatives such as Help to Grow, which offer access to learning and experienced mentors, should be maintained as they've started to gain traction.
These programmes should be iterated to respond to small business needs and supercharged with support from the private sector to make sure they become well known and highly adopted. The results should be measured effectively and used to inform future programmes and policy.
As we head into a recession, courses like this will be vital to make sure small businesses can adapt to a different trading environment.
2. Unleash cash flow
Sort out late payment once and for all
Around 65% of invoices to small businesses were paid late in May, according to a study by Intuit QuickBooks, with an average of £22,700 outstanding per business. Our Q3 2022 Small Business Barometer found one third of small businesses are still 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.
Increase government spending with small businesses. Our report, Access All Areas: Government, found that despite the ambition to spend 25% of its procurement budget directly with small firms, the government has only so far managed to spend 10%.
Leveraging technology by connecting government's tier-one suppliers to suitable subcontractors would help. It is small and nimble businesses that will inject new ideas and innovation into contracts.
3. 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 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 government's 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% 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.
4. Boost the workforce
Support unemployed and the 'unretired' into self-employment
Unemployment is expected to rise yet there's 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 1.5 million over the summer. Many more are 'unretiring', retraining and launching their own business. The government should consider adding unretired eligibility to the Restart 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.
5. Open doors
Unleash an export boom
Small businesses have put international trade on hold. It's time to get exporting and go global.
The 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.
6. Simplify taxation
Reverse the National Insurance 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 tax
The sliding scale of the marginal rate means firms that make more than £50,000 in profit are already affected by high taxation. Experts point to the fact that incremental increases can attract up to 26.3% in tax.
Our members tell us that 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 6% 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.
7. Unleash investment
Scrap the sunset clause for key investment schemes
Scrapping the sunset clause for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) (which means they expire in 2025) and removing 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.
We're running live coverage of the Autumn Statement from 11.30am on 17 November, with an online panel of business owners and experts sharing instant reaction. Head to this page to follow the reaction and share your views.