Outlook for 2014 and what businesses need to watch out for
Entrepreneur William Berry delves into a business barometer’s findings and calls for small businesses and government to seize the moment
Even just a few years ago many small business owners were contemplating their future with a weary sigh; there were fears about double dips and consumers hoarding their cash, unwilling to spend.
But the good news is we seem to be over the worst, if the Baker Tilly annual SME Distress Monitor is anything to go by.
It warms my heart to hear that confidence is slowly returning to small business owners, with 45% of those surveyed stating they were either confident or very confident about growth opportunities over the next 12 months.
Not only that but 48% expect to increase turnover by 5% or more.
This is fantastic news for the small and mid-sized business community. It finally shows that the positive headlines regarding the economy – such as a fall in inflation to 2% and unemployment to 7.1% – have finally filtered through to consumer consciousness and they are more likely to spend their money than squirrel it away.
A word of caution, however: while confidence has increased, this hasn’t translated into increased investment in business.
Low capital outlays = low growth
Almost all, 96%, of business owners said they were happy achieving their current level of success, 74% expect their workforce to stay the same, and only 23% plan to increase their sales and marketing spend. A large majority, 84%, are not willing to take on any more debt in 2014.
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In short, it looks like businesses are holding steady and seeing where this positive momentum gets them before they make any capital commitments.
This lack of investment while understandable from a business point of view should be a worry to the government. Without investment companies are unable to grow and create jobs, they are unable to contribute more to the country’s coffers.
To be fair the government knows how valuable small businesses are to the economy and has set up numerous schemes and funding programmes to enable more people in becoming business owners and helping those who have already made the leap to company director.
The real problem is that people don’t know about the help that is available to them. Although 55% of business owners knew about the capital allowances they were entitled to, just 32% knew about the enterprise investment scheme (EIS), only 19% had heard of venture capital trusts (VCTs), 15% were aware of research and development tax credits and a fifth of business owners hadn’t heard of any of the schemes.
These schemes in some cases have been around for over a decade so it is a shocking indictment of the government’s lack of marketing that a huge chunk of the SME community does not know about them.
And even those that know about them are rarely using them – of the 32% of people who knew about EIS just 15% had taken advantage of the fantastic tax breaks available.
Time to broadcast small business to the nation Cameron
The government is, unusually, hiding its light under a bushel when it comes to giving small businesses a leg up. Never normally ones to shy away from blowing its own trumpet it seems that these initiatives have been launched quietly and without thinking about how the business community will be made aware of them or given access to them.
We shouldn’t moan too much, however. The schemes are there for the taking and the economy, and overall confidence is on the up giving small businesses the first reason they’ve had to smile in a very long time.
After years of cautious consumers keeping their hands in their pockets and entrepreneurs worrying about where their next sale will come from, small business owners can now heave a very tentative sigh of relief.
William Berry is a serial entrepreneur and in 2006 was named a Young Gun by Growing Business. He is the founder-director of accommodationforstudents.com, and Vincentbond.com. William is also CEO of the new video start up p6.com, based in California.