Posted: Wed 7th Sep 2022
With Liz Truss confirmed as the new prime minister, Enterprise Nation founder Emma Jones outlines what the government should do to support small businesses.
Small businesses are vital to future proofing the economy. With an increase in costs for all areas of business, start-ups and micro businesses are struggling to grow and flourish. The government must recognise that this is a risk to innovation and the economy now and into the future.
Any package of support must safeguard businesses but also ensure start-ups, micro and small businesses have enough help with energy bills at the same time as struggling households.
In this decade of change, programmes like Help to Grow, which offer digital at one end and mentoring, advice and a programme of tailored support at the other, 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 businesses build on the areas of business they can control and learn to manage the things that they can't, such as increased costs. But there is still more to be done.
The government must acknowledge the importance of start-ups in tackling issues like sustainability and energy supply. Manchester-based Red Planet Farms, which launched last year, is working to increase the productivity of traditional farming while crucially using less water and energy. These are the start-up innovators that will help us build a more sustainable and resilient economy - and they must be considered and protected now in any government response.
Enterprise Nation's small business wishlist for Liz Truss
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 and digital expertise, 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.
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 QuickBooks, with an average of £22,700 per business outstanding.
The government should 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. Enterprise Nation's Access All Areas: Government report 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 sub-contractors would help. It is small and nimble businesses that will inject new ideas and innovation into contracts.
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 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.
Support unemployed people 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 re-balanced from finding people jobs to supporting people to create their own.
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.
Reverse 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.
Reverse plans to hike Corporation Tax. While start-ups and small businesses may not be immediately affected by an increase in tax over £250,000 in profit, an increase in Corporation Tax deters 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.
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.
Stand behind businesses and households. According to Enterprise Nation's latest Small Business Barometer, 44% of small businesses are now started as a side hustle and operate within the home, putting added pressure on consumer energy bills.
The government should publish the long-awaited entrepreneurship strategy to 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 and leverage efficient broadband and transport infrastructure to sell well at home and overseas.