Amid the pressure of running a small business, keeping abreast of an ever-changing economic and business landscape can be challenging. However, given that these developments could directly or indirectly impact on your business, it’s important to catch up on the latest news from your industry when you can.
To help small business leaders keep up to date, we’re launching a regular series which aims to collate and share some of the most significant news from the world of UK business. So let’s get to it.
Complex business jargon and terminology could be deterring small businesses from seeking the investment they need to grow, according to recent research from LDF.
Around a half (47%) of UK SMEs have been discouraged from applying for business finance as a result of encountering overly complex terminology, with a third of respondents unable to recognise common financial terms like CAPEX, EBITDA and ROCE.
Given last year’s EU referendum vote, and the uncertainty this casts over the future economic landscape of the UK, the result of LDF’s research is worrying. For SMEs to continue to grow in times of economic insecurity, attaining finance must be a feasible option for cash-strapped businesses.
Speaking to specialist SME news source, smallbusiness.co.uk, Peter Alderson, managing director of LDF, said that he’s not surprised that the complex language of finance hinders the potential expansion of such a large majority of SMEs.
He said: “It’s disappointing, but perhaps not surprising, that nearly half of UK SMEs are put off applying for finance by the terminology used. For many, running an SME is a challenging, all-consuming activity, so complicated financial jargon and acronyms are just extra barriers in the way of their success.”
A number of small businesses have spoken out about the government’s proposed business rate increases, with one concerned business owner even going so far as to state that the planned price hikes have the potential to ‘finish off’ the most vulnerable small businesses.
After a long delay in the reassessment of business rates, the government announced considerable price rises in 791 local regions across England and Wales, with the new rates taking effect from the 1 April 2017.
One of the towns hardest hit by the business rates hike is Southwold in Suffolk, whose 79 high street retailers are facing a rise in the rateable value of their premises by 152%. It’s a similar story in hundreds of other local authority regions too, with small businesses expected to feel the pinch of business rate increases in excess of 50%.
The government bases business rates on the value of commercial property, and usually reassesses the rates on an annual to two-year basis to ensure businesses aren’t hit by huge and irregular price rises. However, the last time business rates were reviewed was 2010, and figures show that since then rates have risen by £654m.
While large high-street stores and chains are able to cope with the incoming business rate increases, small businesses and independent shops are understandably concerned by the sharp increase, which already represents a significant strain on their bottom line.
Speaking to smallbusiness.co.uk, Paul Simbler, director at HOB Salons in London, said this of the proposed increase to business rates: “Some businesses are on the edge and all it will take is a little push to finish them off. The government is completely out of touch with what’s going on, and the longer they don’t listen to high street retailers, the worse it will get.”
According to the most recent statistics, 15 shops close on Britain’s high streets every day, with experts predicting that this figure could rise as operating costs continue to grow. Small businesses are therefore calling on the government to take a different stance on business rates, and launch a review into how the rates are calculated in the future.
75% of British technology firms are forecasting business growth in 2017, according to new research from Smith & Williamson.
Of the companies surveyed as part of the study, only 56% across the small business sector said they were anticipating growth in 2017, with technology firms taking the most optimistic stance on growth and development over the next 12 months.
The results of the survey paint a positive outlook for tech companies, with most businesses in the sector feeling hopeful about the prospect of growth in 2017. This is certain to come as good news for the wider UK technology industry, too, particularly given the fact that 2017 had been earmarked as a difficult year for SMEs to plan for growth — with last year’s EU referendum result creating potential uncertainty for thousands of small businesses across the UK.
Commenting during an interview with Business Matters, one of the UK’s leading SME business magazines, Sancho Simmonds, a partner at Smith & Williamson, who commissioned the study, said: “Despite uncertainty in the UK, and wider economy, there are a lot of things going for tech companies as we move in to 2017.
“Tech companies are increasingly happy to use the innovative funding options available to them. This has forced the more traditional lenders; banks and angel investors, to become more tech-savvy.
“Research and development tax credits have also entered mainstream consciousness. Government-backed initiatives have really helped to encourage development in certain sectors, tech being one. Now they need to look at how this push can be best expanded into other areas.”
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There are growing fears small businesses could be excluded by the government’s plan to introduce new digital processes to common business transactions.
New research conducted by the ICAEW has revealed that some smaller businesses may find it difficult to manage the compliance measures of the government’s planned ‘Making Tax Digital’ platform, which requires complete digital reporting on all matters to do with tax and business rates.
The ICAEW highlighted its concern regarding the impact of Making Tax Digital on SMEs as part of its report, Digitalisation of Tax: International Perspectives, which considers the success rate of attempts to digitalise tax conducted by other countries across the globe.
According to the report, only 25% of UK businesses currently maintain electronic accounting records, meaning that many could encounter issues when the government begins to roll out its Making Tax Digital platform.
Commenting to Accountancy Age, David Lyford-Smith, technical manager at the ICAEW, said that he believes the biggest threat to SMEs in the wake of Making Tax Digital could be ‘digital exclusion’, in which small businesses suffer penalties and missed opportunities because they have neither the technical know-how or resources to adhere to the scheme’s digital reporting requirements.
He said: “There must be an avenue for those who cannot comply with digital reporting to avoid penalties; this may be through traditional paper-based record keeping or via supporting a network of accessible and affordable tax agents.
“We believe the move to digital should not be made compulsory and instead should be a matter of choice for business owners.”
While the government has made clear its vision for the future of the British tax system, consultations are on-going and the move to the Making Tax Digital scheme isn’t expected until 2020 at the earliest.
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