64 • BUSINESS & FINANCE
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Prosperity founded on success of UK ’ s smaller business movement
Mike Cherry , Federation of Small Businesses ( FSB ) National Chairman ’ s New Year message :
Mike Cherry
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IN THE UK , RUNNING A SMALL business and being your own boss is one of the most challenging and satisfying things you can choose to do . A record 5.5 million smaller businesses and the self-employed employ 60 per cent of the private sector workforce , but the rate of growth has started to slow . Our country ’ s prosperity in 2017 will be founded on the success of the smaller business movement .
In turn , that success rests upon all of us truly creating a new entrepreneurial culture . This means the whole of society - Government and business , customers and employees , public and private sectors – all choosing to support smaller businesses and the self-employed . Politicians need to pursue policies that make it not just easier to set up a business , but also to run it , putting small businesses at the very heart of policymaking . Teachers need to include running a smaller business as a viable option within careers advice . As we look to 2017 , this will only become more important .
But there are clouds on the horizon that must be addressed . Our quarterly Small Business Index constantly tracks confidence levels , and provides a regular health-check for the UK economy . Throughout 2016 , confidence glided down before dipping into negative territory in the third quarter for the first time since 2012 . Smaller businesses have been struggling , and it makes everyone ’ s words and deeds important as we head into 2017 – where we hope for recovery .
The UK ’ s decision to the leave the European Union and the resulting change of government in 2016 did create a huge amount of uncertainty , but new Ministers from the Prime Minister down have been listening to our concerns and suggestions , as has the Opposition . Brexit will bring risks and opportunities for our members , and the strategy adopted in the upcoming negotiations must manage down those risks , and accelerate the opportunities it provides . But as we advocate for our members , we also say , don ’ t forget the domestic , by which we mean the pressing issues that smaller businesses face on their doorstep , right now .
Any smaller business owner will tell you that the sheer cost of doing business has steadily risen over the last year , with a range of policy choices hardening at the same time , creating a cumulative effect . The introduction of the National Living Wage steeply increased labour costs , just as the rollout of workplace pension auto-enrolment hit smaller business .
2017 starts with a weaker medium-term economic outlook , and the prospect of inflation in the Spring . This will squeeze smaller firms affected by the rising price of imports , supplies and products , but without the ability to move their HQ or workforce , or hedge their costs .
Smaller firms are anchored in their local community and will need to work out how to cope with margins being squeezed even further .
2017 will see a big push in HMRC ’ s Making Tax Digital plans , as the Government makes it mandatory for smaller firms to provide a digital tax report on a quarterly basis . I am deadset against these proposals . At a time when we need businesses to grow , Government should not be putting in place a mandatory new tax regulation that will cost businesses on average £ 2,770 . Smaller firms are the secret to UK success , not a cash cow for the Treasury . FSB is lobbying intensely to persuade Ministers to improve these proposals , which should be voluntary and phased . They should begin by using thresholds to remove more of the smallest businesses from the regime – those who will be least able to cope .
Late and poor payment practice from larger firms remains a huge issue for smaller businesses in every corner of the UK . We now face a poor payments crisis . If this is not tackled , then every year 50,000 businesses will die – leaving £ 2.5bn of GDP missing – purely due to late payments . With 30 per cent of payments typically late , and Finance Directors of large firms squeezing smaller firms to improve their own cashflow , we need to see concrete action and results .
In short , it ’ s not just Brexit – there is a lot to do , to make this an economy that truly works for everyone . Our country ’ s future depends upon our smaller businesses success .
LOCKSMITHJOURNAL . CO . UK | JAN / FEB 2017 Sponsored by Burg-Wächter