Small Business Matters | A Blog for UK Small Businesses

Mumma Mia!

This Sunday is no ordinary Sunday… It’s Mother’s Day! Not only a great time to celebrate your mum, Mother’s Day is a great reminder of the many small businesses run by mums in the UK. According to research by BT Business, nearly 15 per cent of women have already started their own business since having children.

If you’re struggling to find the perfect gift or this day has slipped your mind, don’t fret, it’s not too late! There are plenty of fantastic gifts out there to celebrate mum, while supporting mum-run businesses. This year, rather than looking for the traditional gifts you give her every year, why not opt for a ‘product made by mum’ such as these Lizzie Lou shoes created by Sheena Edwards who decided to set up her mother-daughter flip flop range which she runs from home.

Tell us what you’re planning on buying mum this year!

Small Business Britain: On the airwaves!

As part our Small Business Britain campaign, our managing director Pernille Bruun-Jensen, took to the airwaves to discuss the importance of UK small businesses in the run up to the election.

She chatted with more than 20 radio stations around the UK, sharing the findings of our Small Business Britain survey, as well as some of the key tips that came from the research.

Couldn’t get to the radio in time? Click on the podcast below to hear Pernille’s interview with BBC Radio Northampton (104.2-103.6FM).

BBC Northampton

 

Some of the advice that Pernille shared from small business owners around the UK included:

Be heard! Use channels such as Small Business Britain to make sure your voice is heard, and to call on the government, elected bodies, banks and the wider business community to support your success and prosperity.

Make it personal – According to our research, 84% of small businesses believe that their ability to provide a more personal touch with customers is a key advantage. Start-ups and small companies can show a fresher, newer approach and take advantage of their flexibility.

Keep on top of accounts – Awareness of how much is being spent and for what is important. Our research showed that 85% of small businesses felt the best way to manage cash flow was to always keep accounts up-to-date.

Don’t be late – Most small businesses have experienced difficulty with timely customer payments. Put simply, if you don’t get paid, you won’t be in business for long. Our research showed that the number one way to avoid late payments is to set up clear payment terms at an early stage (48%).

If you want to know more about Small Business Britain or have some comments on the Charter, please get involved and post your thoughts on our discussion boards.

6 hours extra grace on VAT rate change - but still a headache for small businesses

It was reported this week that the Treasury has agreed to delay the VAT increase by six hours. This is welcome news for businesses that would have previously had to make the change at midnight on New Year’s Eve – especially the pubs, clubs and restaurants that will be open for business. The reprieve also applies to retail and telecommunication businesses that will be operating beyond midnight on 31 December 2009, and although good news, it doesn’t make the admin challenges of the adjustment for small businesses any easier!

Come January, business owners will wake up to the after effects of a 13 month 15% VAT reduction and return to the usual 17.5% rate and as such, have to face the problem of trying to sell products and services at higher prices to customers who are still hesitant to buy.

The VAT reduction came into force in December 2008 to help consumers with the recession. However, the fact is that the UK is still officially in recession and therefore, consumers are not likely to have more cash to splash in 2010 and will not like hiked up prices!

UK economy still in recession

This morning’s unexpected news that the UK economy is still in recession is likely to weigh heavily on the minds of small business owners. According to the official figures from the Office of National Statistics (ONS) the UK economy contracted by 0.4% between July and September – a record sixth successive quarter of recession. Despite hopes that the recession was finally over, these figures indicate that the bumpy ride for small businesses owners could continue.

 
 

Small businesses owners have shown incredible grit and determination to survive this downturn. The customer research that we conducted over the summer showed that one in four small businesses put the success of their business in the recession down to their own individual efforts and that of the team they work with. Today’s news means that the struggle is by no means over.

Time for a new wave of young entrepreneurs?

Last week 250,000 young people across the UK anxiously awaited their A level results, but with this year’s grades reaching record highs the competition for university places is tougher than ever. Even those that achieved high grades could miss out on a place. Young people are bearing the brunt of the recession, and the latest Government stats showing that one in six 18-24-year-olds are not in education, employment or training (aka NEETs). This difficult environment could provide the perfect opportunity to foster the next generation of UK entrepreneurs.

The path from school to business owner is actually surprisingly well trodden, with many of our most well-known entrepreneurs choosing the option of starting a business as another valuable way of building their future. Examples include Richard Branson, Steve Jobs, Peter Jones, Ingvar Kamprad (Founder of IKEA), Theo Paphitis, and Lord Alan Sugar. But clearly these few successes are the exceptions not the rule, so it is vital that more help and encouragement is provided to young people that are considering their options at this time.

Small businesses turning to risky loans

It seems the lack of bank lending is continuing to impact small businesses as new research claims that small business owners are resorting to personal loans to improve cash flow. A survey of 505 small and medium-sized enterprises by investment bank Close Brothers has found that 30 per cent would take out a personal loan to finance their business while six per cent said they would use credit cards to fund operations. Although credit cards have been a staple form of finance for entrepreneurs since before the credit crunch hit, the proportion of small business owners using them has increased by 50 per cent since last year. Furthermore, a fifth of those who responded also said they would approach friends and family for the funds, which is double the percentage recorded by the survey last year.

Digital Britain report – impact on UK small businesses

Last week’s Digital Britain report will have a positive effect on many UK small businesses, but could be considered a baby step in the right direction for those aiming to compete internationally. The Government outlined its commitment to ensure universal access to faster broadband, which will make a huge difference to small business owners, particularly those based in rural areas. Many owners rely on the internet to conduct their business, and in the report, the government acknowledges that entrepreneurs are using digital technology to “revolutionise how they operate through online marketing and sales, improving accounting and internal procedures, online tax returns and record keeping and payments.”

The ability to improve accounting and internal procedures is more important than ever in the recession where small businesses are fighting for survival. In addition, as more financially-savvy consumers opt to spend online in search of the best deals, the internet is increasingly a vital channel that small businesses can use to reach a wider audience with their products and services.

Are banks lending to small business customers?

A recent report from the British Bankers' Association (BBA) shows that the main UK high street banks have increased their lending to businesses, both to their existing customers and to customers of other lenders. The level of lending to small businesses rose by £271 million in March, deposits by small businesses increased by £881 million and there were over 52,000 new small business banking relationships established in the month.

This is great news from a small business perspective, as credit difficulties have been top of the agenda for several months. However, in contrast, a recent article in the Times stated that Mervyn King, Governor of the Bank of England, had identified the behaviour of the banks as one of the key reasons that economic forecasts are so uncertain at the moment. The Bank of England’s Inflation Report shows that in two years’ time it is quite possible that the economy will have grown at more than 3 per cent over the previous 12 months, but it is equally possible that it will have shrunk. This unpredictability will be particularly unnerving for lenders.

Budget fails to raise small businesses’ hopes of surviving the recession

According to our latest survey, less than 2% of small businesses said that Darling’s Budget would have a positive impact on their business, while 87% said they were now less likely to vote for this Government at the next general election.

Our research highlights the discontent among Small Business Britain as a result of the Government’s lack of support. A staggering 91% of respondents said the Budget would have no impact on their chances of surviving the recession, contradicting the Chancellor’s remarks that this Budget would help ease the country out of the economic downturn. This could have a devastating effect on Britain, as small businesses play an integral role in the economy, employing an estimated 13.5 million people.

While the Government claimed that the Budget has addressed small business cash flow issues, 90% of respondents disagreed, highlighting the extent to which the biggest challenge facing businesses in the downturn has been ignored.

More reaction to the budget from small businesses...

David Anderson, Living Leaves in Hampshire:

"The Budget is an unhappy picture all round. The Chancellor started off the Budget by saying that it will help stimulate demand in the economy but the measures announced will have little impact on demand. If anything, the 2% increase on alcohol and tobacco duty will dampen demand as it will affect people’s disposable income. The increase in fuel duty tax will place an extra cost on our business as the price of materials being shipped in will rise, while reversing the VAT reduction back to 17.5% will be a further disruption and cost. At the same time, there seems to be nothing in the Budget that will offset these additional costs for small businesses so what help is the government providing?