Small Business Matters | A Blog for UK Small Businesses

The undiscovered population

Recent figures from the Princes Trust Youth Index 2010 did not deliver the most optimistic news for today’s young unemployed Brits who are being dubbed as ‘the lost generation’.

According to the research, one in five young people, that’s 927,000 of 16-24 year olds, are currently out of work in the UK.

The Princes Trust fears that the long terms effects could be significant and that the UK risks losing out on the next generation of doctors, scientists and entrepreneurs if today’s young people don’t manage to get started on fulfilling their career ambitions soon.

Rather than looking at this group as the ‘lost generation’, they should instead be seen as the ‘undiscovered generation’, who should be fostered and encouraged to become the UK’s next cohort of young entrepreneurs and eventual business tycoons. Movements such as the Princes Trust Undiscovered campaign designed to help this group and the Make Your Mark campaign aimed at increasing entrepreneurial behaviour among young people are great ways of encouraging this.

Small business remains the back bone of the British economy, however more support is clearly needed to harness the younger generation of entrepreneurs who are hungry for opportunity and success.

Are British people ready to set up their own business?

Last month, Intuit asked YouGov to survey 2,000 British people to find out just how much interest they have in setting up their own business, and whether the recession has impacted their entrepreneurial dreams.

The result were some fascinating findings which confirmed that while people would like set up their own business in 2009, the recession has curbed enthusiasm.

• A third of Brits have or would like to set up their own business, but have put off their decision due to recession fears.

• Half think that now is a worse time to set up a business compared to this time last year.

• 40% believe that the recession has delayed their ambitions in setting up a business alone.

• 36% of people aged between 25-34 hope to set up on their own one day, compared to just 22% of 45-54 year olds.

On the whole, the results show that people are wary. The downturn has knocked confidence in the staying power of small businesses, and the results echo the awareness of the risk involved. It seems the older, wiser, more experienced folks who have struggled through previous recessions are more reluctant to take on the risk whereas the younger, less experienced budding entrepreneurs are still keen and rearing to go.

With increased support for small business more evident and a New Year just around the corner, who knows, attitudes may change in the near future.  We certainly hope small businesses keep fighting and get the support they so desperately need, especially since they are the back bone of the British economy and critical in pulling the UK out of the recession.

Business births and deaths

On Monday 30th November the Office for National Statistics announced the latest results of enterprise births, deaths and survival in the UK for 2008. The figures highlight some of the early impacts the recession has had on the business landscape and indicate those sectors that suffered most throughout the downturn.

Not surprisingly, the results show there was a 3.7% decrease in the level of business births in 2008 in comparison to 2007 ( 270,000 and 281,000 respectively).What is interesting, however, is that there were fewer business deaths  in 2008 compared to 2007 (219,000 from 223,000) which represents a 1.8 percent decrease. From an industry perspective, some industries faired better than others with business administration and support services having the highest level of business births in 2008. The hardest hit industries were within the accommodation and food sector, finance and insurance and construction sectors particularly suffering with 33,000 businesses closing across the UK.

The results reflect the economic climate of the time, where certain industries suffered throughout the gruelling year that was 2008. While there is evidence that the recession may be drawing to a close, British people continue to remain cautious about setting up businesses with just 14% of British people surveyed believing that now is a better time to start a business than a year ago.

While these figures do reflect the risks of running a business during a recession there is evidence that enterprises set up during a recession tend to be exceptionally resilient. For businesses to survive through a challenging economic climate, it is essential to manage finances correctly, be fully aware of what is going on in the industry and be present where the customer is, which increasingly is online. You can see our previous blog for top tips for prospective entrepreneurs. With over a third of Brits keen to start their own business we can hope to see a boom in business births come 2010.

Is your business ready for Christmas?

Christmas is one of the busiest times for trading, and with just five weeks to go, the next fortnight is going to be crucial for small businesses across the country. Business owners need to ensure there is enough stock and staff on hand to manage the demand, as well as finding the time to get the all important Christmas decorations up!

Get online
As consumers become savvier and prioritise price and convenience when doing their Christmas shopping, the internet is becoming the preferred tool for browsing and purchasing. Traditionally Christmas accounts for a fifth of annual online sales and this year is set to be no exception in reaching that target. According to a new survey by eDigitalResearch and IMRG, 93% of us will be shopping online for Christmas presents this year. Despite the recession, online sales will remain strong and 71% of people are prepared to do half or more of their shopping over the internet.  With this in mind, if small businesses want to reach all their customers and maximise profits, they have little choice than to be online.

Global Entrepreneurship Week: Intuit takes to the airwaves!

As we mentioned earlier in the week, in honour of Global Entrepreneurship Week our resident small business specialist, Catherine Harrell, took to the airwaves to discuss why entrepreneurs are so important to the UK economy and to offer some top tips on starting a new business in tough economic times.

Catherine chatted with more than 20 stations around the UK, sharing insights that prospective small business owners and those who have already taken the plunge can use to be ensure their success.

Couldn’t get to the radio in time? Click the podcast below to hear Catherine’s interview with BBC Surrey (104.6FM).

BBC Surrey Interview

Throughout the day, Catherine offered these top tips:

Put your plan on paper – whether you’re approaching a bank or your friends and family, getting a strong business plan in place is crucial to securing funding. This should cover how you plan to attract customers to your business, as well as what your contingency plans are for when things go off track.

Global Entrepreneurship Week 2009

This week (16-22nd November) is Global Entrepreneurship Week 2009 (GEW), a worldwide movement of entrepreneurial people, with millions unleashing their enterprising talents and turning their ideas into reality.

To coincide with GEW, we have surveyed over 2000 people in the UK*, and found that a third of British people want to, or have already started their own business. However, the recession has had a damaging effect on entrepreneurial confidence, as 40% of those that do want to set up their own business blame the recession for delaying their plans. Only 14% believe that now is a better time to start a business than a year ago.

Our research shows that the desire to become an entrepreneur is still alive and kicking for lots of Brits, but many are putting off the decision due to worries about the recession. As small businesses contribute more than 50 per cent of the UK turnover and employ almost half the working population, it is clear that more must be done to restore confidence and encourage entrepreneurship in the UK.

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!

Optimistic outlook from small businesses

It seems the mood has changed to a more positive tone amongst small businesses in recent weeks. There is a general consensus that conditions are improving.

This week, The Times in conjunction with Barclays, released results from over 3,700 small business owners, who were surveyed on how they felt about the recession. Overall, the survey suggests a much more positive view from small business owners in comparison to six months ago. Many feel that the weight of last year’s recession has been lifted and their outlook for the New Year is a lot more upbeat. In fact, more than 60% of respondents were feeling confident about the future of their business.

Switching priorities:

While last year the priority for small businesses was very much focused on keeping cost down and the doors open for business, the priority is now shifting to expansion and growth, with small businesses investing in the new technology, people and expanding their product lines. 53% of those surveyed planned to grow their business throughout 2010; this is a significant increase from this time six months ago when just 42% of respondents had the intention of expanding.   

It’s obvious that small business owners have endured a tough year with their strategies being tested to the max. Only recently, it was reported that the UK economy was still in recession – yet, despite this, small businesses are showing real determination and grit, and now it seems, feel optimistic about their future.

Strike set to continue

So the postal strikes are set to continue, and hopes for a trouble-free two months in the run up to Christmas don’t look promising!

The walk-outs across the country have being going on since June now, that’s nearly five months of disruption, and it is fast becoming one of the most frustrating times – especially for the smaller companies, who rely solely on Royal Mail to deliver their letters, parcels and goods to customers.

Whereas bigger players, for example Argos and Ebay, have the flexibility to sidestep Royal Mail so their customers don’t feel the effects, small businesses are left troubled by the ongoing disputes, which may have a crippling affect on trade, especially with one of the busiest periods approaching. According to a poll conducted by the Federation of Small Businesses, strikes could cost every UK small businesses up to £5,000.

It’s no surprise then, that according to a survey from the British Chambers of Commerce, 75 percent of small businesses are looking elsewhere for a more reliable service. Richard Tyler, Enterprise Editor at the Daily Telegraph is encouraging businesses to walk away and consider alternative postal providers:

“the best punishment for any organisation that abuses its position is for its customers to walk away. Complain first, yes. If they don’t change their behaviour, that’s it!”

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.