As employers grapple to support staff during the current cost of living crisis, they could be ignoring a key employee benefit that will bring substantial cost savings for workers.

New research from engagement platform, Sodexo Engage shows that currently only 11% of UK employees have signed up to the government’s Cycle to Work scheme. That’s despite it being one of the most cost-efficient forms of commute.

The research, timed to coincide with National Bike Week (5^th – 12^th June 2023) reveals that, while 64% of UK employees currently have access to a Cycle to Work scheme, only 25% of them have made use of the discount.

In the face of soaring commute costs, and an increase in rail strike action, Sodexo is recommending business owners sign up to the Cycle to Work scheme to promote a cheaper, environmentally-friendly commute method to their employees.

Employees could save £1,199 a year on travel costs

Following a 5.9% increase in train commuting costs earlier this year, Sodexo Engage surveyed 1,000 UK workers to calculate the average cost of travelling into work in 2023.

In collaboration with Censuswide, Sodexo discovered that respondents are spending an average of £24.97 on commuting expenses each week. Over the course of a year, this accounts to a staggering £1,199 per individual.

Notably, for those in London, the figures skyrocket to £1,577, making it the most expensive commute in the UK.

Commute costs have become a major concern for today’s employees – particularly for younger workers, who tend to be less financially secure.

In a recent Startups survey, exploring attitudes towards a four-day week, we discovered that 38% of employees would choose to work one less day a week to reduce their commuting expenses and time.

Graham James, Director at Sodexo Engage, comments: “Clearly just having a Cycle to Work scheme doesn’t guarantee take up, as our research shows.

“It’s important that employers are communicating these benefits and making it as easy as possible for employees to make use of them in order to gain those all-important savings.”

Scheme has savings for employees and employers

For the business owner, investing in an attractive benefits and perks package for employees brings multiple organisational advantages. Crucially, it can go a long way to improving staff morale and lowering turnover rate.

In today’s scarce talent market, companies need to be pulling out all the stops to attract and retain their existing workforce.

As a result of the cost of living crisis, many workers are feeling demotivated following a fall in real wages. The Cycle to Work scheme is an example of a benefits package that is designed to support financial wellbeing and education. Its introduction could help employees to budget and stretch their wages further without the need for a pay rise.

Organisations that already offer a Cycle to Work scheme, but suffer from few sign-ups, should also reexamine their approach to the policy to see how they might encourage greater employee engagement.

Some of the challenges will be simple to fix; for example, educational barriers. When asked why they didn’t want to cycle to work, 14% of respondents said their workplace didn’t have the facilities to allow them to shower when they arrived.

James adds: “The reasons given as to why people aren’t cycling to work shows a clear need to empower employees to help them realise that cycling to work is a viable option to offset the cost of commuting.

“This will require a holistic approach from HR and business leaders, encouraging employees to take up cycling and make full use of the Cycle to Work benefit.”

How does the Cycle to Work scheme work?

With a Cycle to Work scheme, the employer will purchase a bike, and accessories, for the staff member to ride to work. The individual can then ‘hire’ the bike through salary sacrifice, spreading the cost over a repayment period of 12-18 months.

However, the employee won’t be paying full price for the bike. Employees can save up to 42% in tax and NI contributions. That means the price tag of a brand new bike, which typically averages around £600, would be slashed to just £348.

The business will also receive a discount. For every staff member who goes through the scheme, the employer can avoid paying around 13.80% in National Insurance Contributions (NICs). On average, bosses will save £138 for every £1,000 spent.

In addition to these benefits, cycling to work can boost an employee’s mental and physical wellbeing, as well as being a much greener option than other modes of transport.

Over a third (37%) of workers have looked into starting a new role, as today’s turbulent jobs market sees them lose confidence in traditional 9-5 employment.

The phenomenon is being referred to as ‘career cushioning’. It describes an employee who carries out regular searches online to monitor what roles might be available as a safety net, should anything go wrong in their current job.

According to a poll of 2,000 white-collar workers from recruitment firm Robert Walters, the main rationale to ‘career cushion’ is a lack of job security. 72% of respondents cited this as their leading cause for concern.

The findings are a stark reminder of the ongoing hiring challenges currently faced by small business owners. Office for National Statistics (ONS) figures show that job-to-job moves in 2022 reached a record average of 946,000, driven by resignations rather than dismissals.

Chris Poole, Managing Director of Robert Walters, is warning business owners to look at how attractive they are to future and existing talent, commenting: “The rise of ‘career cushioning’ tactics [means] staff retention needs to be at the top of employers’ lists.”

Cushioning tactics in full flow

Battered by sky-high energy prices and a ballooning cost of living crisis, firms have been forced to cut staff to restore order to balance sheets. Most notably, in tech. Since the beginning of this year, 570 tech companies have let go of around 168,000 employees.

The downsizing has now trickled down into other UK sectors. Earlier this year, ONS data showed that redundancies have increased to the highest levels post-pandemic.

Robert Walters’ research suggests that employees are wise to this troubling economic landscape.

Alongside low job security, respondents also referred to turbulent economic conditions (55%), internal changes within their business (45%), and low job satisfaction (33%) as the main motivations for their ‘just-in-case’ browsing.

Preparing for the worst, many are searching for a back-up career option online. Monitoring the jobs market (66%) and ‘tidying up’ their CV (43%) are the top tactics being used. 15% of people said they had started a side hustle.

The grass isn’t always greener..

Interestingly, the data also shows that a quarter of professionals admitted that their perusal of the jobs market has led them to appreciate their employer more.

A further fifth admitted that they have discovered their current employer pays better than the market average.

Poole comments: “Career cushioning needn’t always be looked at as a negative by employers. In many cases it can lead to employees upskilling, being more determined to succeed or engaging in more networking – bringing greater value to the business.

“There is no guarantee that those that have a ‘career cushion’ will leave, it’s an old adage but employees researching opportunities elsewhere can often illustrate to them that the grass isn’t always greener.”

Of course, there is still a risk that career cushioning might slip from a passive exploration of options, to an employee actively searching to leave their role.

That peril has become more menacing in recent years, as the fallout from the ‘Great Resignation’ post-COVID continues to threaten small business growth strategies. Official figures show that the unemployment rate has hit a record high in the UK.

The drain on talent has proven so disruptive that many startups are exploring alternative recruitment routes, like hiring ex-offenders or overseas workers.

How to pop a career cushion

It sounds simple. But the easiest method to deflate a career cushion before it can spring your best talent into a new position is to ensure you are offering  a better remuneration package than rival employers.

When deciding how much to pay your employees, make sure to carry out industry benchmarking. This is essentially a fancy way to describe researching how much people in similar roles are being paid in other companies, so you know the going rate for that role.

Understanding how much your employees could be being paid at another company will help you to put yourself in their boots, and evaluate whether a pay rise might be necessary to attract and retain talent.

Perk up

Of course, it’s not all about the money. Benefits and perks packages are now strong magnets for enticing new applicants to your workforce – in fact, forgetting this information is one of the most common mistakes made on job adverts.

Learning and development (L&D) opportunities are the most in-demand. E-learning solutions provider IMC has found that 86% of employees would remain with their current employer for longer if their employers invested more in training and upskilling.

Today’s workers are also searching for ways to engage in meaningful work – a job seeking method where the candidate prioritises roles that are linked to an individual’s personal views and passions.

As a result, organisations are increasingly posting about their unique company values and corporate culture. In fact, LinkedIn recently unveiled a first-of-its-kind values-based tool for job searchers to find roles that reflect their beliefs.

More on this: learn about the many effective tactics you can use to lower staff turnover rate and retain talent in our full guide.

Employers who are sceptical about the four-day week will be surprised to learn that their employees could be doing it in secret already.

money.co.uk, a financial comparison website, surveyed 2,000 UK employees to examine the different generational attitudes to work and burnout coping mechanisms. The results show that 64% of employees are reducing their own hours to combat stress.

According to the findings, 63% of workers engage in ‘Bare Minimum Mondays’, (purposefully doing the least amount of work expected to ease themselves into the week). 65% admit to skipping out early on a Friday.

Startups recently found that 78% of UK employees want a four-day week. Of those who are strongly in favour, 59% view the policy as a strategy to reduce stress and burnout.

Combined with the money.co.uk research, our findings indicate that, as companies hesitate on implementing a shorter work week, staff are cutting their own hours to protect their mental health.

Is the desire for a four-day week impacting productivity?

The money.co.uk data also shows the most popular anti-work trend amongst workers is ‘Freedom Friday’, where over two thirds (65%) of all workers take on a lighter workload to finish the week earlier.

The data indicates that Freedom Fridays, which has taken the social media app TikTok by storm, are most popular with millennials. Almost three quarters (72%) say they are regularly finishing up early at the end of the week.

It could be that the growing recognition around the success of a four-day week – 7 in 10 employees intend to ask their employer to embrace the perk – is what’s causing workers to down tools.

However, that employees are choosing to put less effort in during their shifts does not necessarily mean they are less productive. In fact, of the companies with a four-day week in 2023, many have chosen to adopt the practice as a way to improve their efficiency.

Indeed, the results of the UK’s largest four-day week trial, unveiled earlier this year, show that 57% of the companies which took part in the trial chose to offer their employees either Monday or Friday off work.

This suggests the policy helped to make up for hours lost due to those days of the week that are traditionally less productive.

‘Quiet quitting’ trend rages on amongst UK employees

Last year, ‘Quiet Quitting’ entered the mainstream as a work term. In response to the rising cost of living, and a fall in real wages, the practice began to become popular amongst stressed out workers.

As opposed to outright quitting their job, the phrase refers to only completing one’s minimum work requirements – quitting going above and beyond or bringing work home after hours.

money.co.uk’s data reveals that Quiet Quitting remains fashionable amongst staff. On average, more than half (54%) currently engage with the trend.

Breaking the data down by age group, money.co.uk found that younger people are most likely to admit to quiet quitting. Just over 3 in 5 employees surveyed aged 25-34 said they currently partake in the practice.

This aligns with the findings from our recent four-day week survey, completed in collaboration with YouGov. We found that the perk is most attractive to younger employees, with 58% of Gen Zers saying they would seek new employment for it.

But even amongst over 55’s, the group who are least likely to ‘quiet quit’, two in five (42%) admit to pressing pause on their career ambitions.

Rise in staff burnout spells trouble for small businesses

While the self-made four-day week model doesn’t necessarily lead to a drop in output, it does raise a red flag for firms in terms of staff motivations for ‘slacking off’.

An organisational culture where staff are actively seeking ways to limit their productivity can only be described as negative. Rather than laziness, it is likely reflective of the growing mental health crisis that is threatening employee wellbeing.

In a survey of over 1,000 UK employees and HR managers, Reward Gateway, an employee engagement platform, found that four in five workers say workplace burnout has had an impact on their health and wellbeing.

Such anxieties will make workers more likely to avoid finishing tasks as a way to protect their mental health. The money.co.uk research shows that 63% of employees experience the ‘Sunday Scaries’; a feeling of dread at the end of the weekend.

This is not just a humanitarian concern. It also has real ramifications for the business. Government figures estimate that sickness absence and lost productivity through worklessness contribute towards an estimated £100bn annual cost to businesses.

This figure is only expected to increase as more workers report feeling fatigued and overburdened by their workload.

Last month, official labour figures from the Office for National Statistics showed that a rise in stress and burnout has led to a record number of employees out of work due to poor health.

How to keep employees healthy, happy and motivated

Work environments that reward and recognise staff efforts – and ensure employees are given a manageable weekly workload – will nurture a safer and happier workforce. This will improve employee engagement and productivity, as well as team morale and performance.

According to research by Reward Gateway, 72% of UK staff believe their workplace wellbeing would improve if they were simply thanked for their hard work.

James Andrews, money.co.uk business loans expert, said: “Focusing on perks known to be beneficial to mental health, like exercise and eating well, can be cost-effective for business owners to drive motivation and productivity, at the same time as reducing absenteeism.

“As such, subsidised gym classes and memberships, offering a free healthy breakfast in the office and virtual mental health counselling could end up boosting your bottom line as well as proving popular with staff.”

More on this: our guide to the top employee benefits and perks in 2023 has 50+ ideas for support measures to reduce stress in your workforce.

New data suggests that a side gig could bring in more than a worker earning the UK Living Wage, highlighting the opportunity available for enterprising employees.

While many people view side hustles as a way to generate cash without leaving their full-time job, research from ecommerce website builder GoDaddy shows that the average moonlighter earns a whopping £22,900 a year in supplemental income.

That is around £1,600 more than someone working 37.5 hours a week on the UK Living Wage of £10.90. It demonstrates the huge return on investment that savvy entrepreneurs can get for relatively minute startup costs.

The analysis includes data from 2.3 million UK microbusinesses, and is complemented by an annual survey of 2,683 UK microbusinesses owners (those with a unique domain and an active website) from January 2023.

Side hustle era continues for enterprising Brits

Leading independent job board CV-Library recently revealed that 58.2% of UK workers are planning to take on a side hustle in 2023, driven by the twin priorities of job security (62%) and earning more money (38%).

Side hustle culture has grown in tandem with the popularity of remote working. As many company employees work from home to cut down on commuting time, a large proportion of us have started putting that time into generating a second income.

Both of these motivations are likely driven by the cost of living crisis, which has led to a fall in real wages amongst UK workers.

Younger people, the age group that tends to be the least financially secure, are most likely to start a side gig. Of the microbusiness owners that GoDaddy surveyed, 81% were aged between 18 and 34 years old.

Research has found that younger entrepreneurs are also the most likely group to turn their side gig into their main source of income. 92% of startups founded by Gen Z entrepreneurs start off as a side hustle.

Side gigs cheap and quick to start

One of the most appealing aspects of starting a side hustle is that it requires very little upfront costs. According to GoDaddy, 58% of side hustlers funded their new venture with less than £500.

The GoDaddy research also revealed that starting an online side hustle is time-effective. Easy small business website builders mean that almost half of owners had their site built and up and running in a couple of days. 13% said it took them just one day.

Katie Anderson is the owner of vintage and slow fashion business Pine & Treasure. Anderson says she set up her website with GoDaddy to make a bit of extra money whilst travelling.

“I started selling second-hand items through Instagram. When I returned to the UK, I wanted to continue the business and expand online. Setting up a website was incredibly simple and stress-free, costing me just £230.”

More than a third of side hustlers using AI tools to build their business

Increasing numbers of entrepreneurs are also using artificial intelligence (AI) to help build and grow their businesses.

The superfast rollout of the technology has been a cause for concern for some business owners. IBM CEO Arvind Krishna recently made headlines when he announced the tech giant would stop hiring for roles that AI could replace.

Nonetheless, as AI tools become cheaper and more accessible, they are proving to be a helpful accelerator for startups to scale-up without needing to spend money on hiring expensive talent.

More than a third of the side hustlers that GoDaddy surveyed reported using AI tools to contribute to their business in some way. The most popular uses are generating social media copy (47%), conducting market research (41%), and devising social media strategy (39%).

Andrew Gradon, head of GoDaddy UK & Ireland, comments: “It has never been easier, or quicker to set up an online side hustle, and GoDaddy’s data shows the financial rewards can be significant.

“Technology has dramatically reduced the barriers to entry, giving entrepreneurs the tools to start and grow their businesses in no time at all.”

From kitchen table to business empire

The ease and speed of setting up a side hustle, combined with the potential financial reward, mean 70% of the entrepreneurs surveyed by GoDaddy reported that they now hope to turn it into their primary business.

Many entrepreneurs choose to launch their business careers through this corporate ‘side door’. The side hustle route has fewer obstacles to jump through, as owners can avoid paying for expensive overheads like office space or business rates.

Investment is also side-stepped. Because of the low startup costs associated with starting a side hustle, the more challenging areas of starting a business, such as raising capital, can be prolonged.

Starting small can also ensure that scale-up remains achievable, by setting a more gradual growth trajectory. In fact, despite the current business challenges around record-high energy rates, almost two thirds (60%) expect their venture to grow by the end of 2023. Just 3% think they will decline.

Anderson is in the former group. “Since going online, Pine & Treasure has grown significantly,” she shares. “The business is generating enough profit for me to manage it full-time, matching my previous salary as a marketing director for a creative agency.”

Feeling inspired? Check out our guide to the top cheap small business ideas for a full breakdown of the best, low-cost startups with a big return on investment.

New research from tech startup Multiverse finds that 70% of senior leaders at larger companies do not believe the current higher education system is delivering necessary work skills.

Multiverse surveyed 600 bosses at companies with more than 50 employees in March 2023 to ask their opinion on the talent pipeline.

Three in five executives at larger companies declared they learned more valuable skills during the first two years in the workplace than they did in university. Despite this, Multiverse uncovered that the majority of firms still ask job seekers to list a degree on their application.

Below, we explore the results in more detail, and look at how a skills-based approach to recruitment might be the solution.

Higher education drops out of favour amongst young people

Multiverse estimates that the average graduate needs more than 11 months of on-the-job learning before they are fully ready for the world of work, despite completing at least three years of higher education.

According to the survey’s respondents, UK universities do not sufficiently teach durable soft skills like teamwork and leadership. They also do not offer enough courses that link to real-world experiences in the workplace.

It’s likely that many graduates will agree with this assessment. The idea that a university degree is not worth its weight has been gaining traction amongst young people. Our report into graduate salary expectations in March found that uni leavers in the UK now expect to earn over £5,000 more than the average starting salary.

In part, the disconnect between younger workers and their older managers could be described as whiplash from the sudden shift between pre- and post-COVID ways of working.

Overnight, UK offices and workplaces have moved online. Virtual meetings are now the norm, while hybrid work patterns mean colleagues can be working ‘together’ while hundreds of miles apart. The ramifications of this change have not yet been fully realised by bosses.

The result is a less-experienced group of employees who are learning crucial soft skills, such as communication and teamwork, through a computer screen. Line managers are blaming their reports, arguing that Gen Z is the most difficult generation to work with..

Employers are aware of university bias. So why do they still ask for a degree?

Four in 10 of the businesses Multiverse surveyed predict that higher education will matter less for applications in the next five to ten years. Nonetheless, 54% of all business leaders surveyed admitted to still having degree requirements in place.

Together, these findings suggest that asking for a university degree has become an old habit that refuses to die hard.

Hiring managers may be reluctant to let go of time-honoured recruitment practices. They might have inherited their company’s recruitment criteria from a predecessor.

Whatever their thought process, it seems that change is in the air. Last year, the number of companies setting a 2:1 level degree as a minimum qualification in job adverts dropped below 50% for the first time, according to the Institute of Student Employers (ISE).

Euan Blair, CEO of Multiverse, said: “The university system is far removed from the realities of the workplace and there’s little to no correlation between academic grades and job performance. Yet many businesses still require a degree to open the door to the best jobs.

“We need to completely rethink our relationship with education. The idea that a three or four-year degree is enough education for a three or four-decade career has passed.”

Hiring apprentices named as top alternative method for combatting the skills gap

Multiverse reports that 67% of business leaders back on-the-job learning (such as apprentices or internships) as the best way of developing skills for the workforce. In fact, they are 36% more likely to back this growth tactic over higher education.

Earlier this year, research found that the work of apprentices totals over £550m in cost-saving or revenue-generating activities for the UK’s 1.4m estimated employers.

Large-scale schemes, like the Amazon Apprenticeship Fund, have become popular amongst SMEs. This is especially true in the face of the UK’s developing digital skills gap.

A shortage of tech workers has proven particularly disastrous for growth plans, leaving many firms unable to invest in job-ready AI talent. As a result, managers are hiring from abroad, aiming to plug the gaps by issuing global talent visas to foreign workers.

Of course, in the current hiring crisis, UK employers might pale at the idea of taking on new staff – even low-cost trainees. Outside of apprenticeships, Multiverse says there are other, practical steps companies can take to develop the skills of their workforce.

It recommends that companies design job adverts which look beyond academic success. It also suggests embedding on-the-job learning programmes, in order to future-proof the workforce and prepare for emerging in-demand skills.

“The future of learning is working,” Blair predicts. “Instead of relying chiefly on the higher education system, businesses should prioritise training programmes that run throughout someone’s career.

“This will be key to unlocking business and economic potential, and creating a much more diverse group of future leaders.”

As generative AI and machine learning continue to evolve, cybersecurity companies are warning businesses about blindly adopting these technologies.

According to Ramsac, a cybersecurity provider, large language models (LLMs) can be detrimental to companies if used improperly.

LLMs rely on accessible data from the open internet to inform queries and responses for users, making data privacy difficult to protect.

If you’ve ever used ChatGPT, you would have noticed it doesn’t ask for your privacy preferences before use. This means LLM systems like ChatGPT can’t decipher between confidential and readily available information, meaning intellectual property or commercially sensitive details could easily be exposed.

These concerns escalated to such lengths that Italy temporarily banned ChatGPT in April, after OpenAI was accused of unlawfully collecting users’ data.

Although ChatGPT eventually went live again in the Mediterranean country, it hints at the dangers of blindly jumping on the AI bandwagon.

The dangers of blindly using AI

Whilst AI has been used for transformational projects like finding new drugs or creating robot skin that resembles human touch, it has also been used for malicious purposes.

Although the full extent of cybercrime is yet to be determined, generative AI is already being used to launch sophisticated phishing scams. Cyber attackers can use the technology to script and automate communication without spelling errors, making them less suspicious.

According to a report by TrendMicro, the features that make AI and machine learning systems integral to businesses are also the very same features that cybercriminals abuse for ill gain.

Whilst research shows that AI technology has not represented a lower barrier to entry into cybercrime and therefore, more cybercriminals, it is making their methods more sophisticated.

With cybercriminals taking advantage of AI, it is crucial to be prepared to integrate the technology into daily business routines to prevent being compromised.

To prevent walking into a cybertrap, there’s a few things that businesses can do:

• Avoid using public LLMs for business-specific tasks or information, such as reviewing redundancy options
• Use an LLM from a cloud provider or self-hosted as this offers more security and privacy
• Consider the queries and requests before submitting them to LLMs as it’s possible for this information to be hacked and leaked
• Avoid including sensitive information on public LLMs, such as confidential data
• Submit business critical queries on private or self-hosted LLMs only
• Ensure up-to-date cybersecurity monitoring is enabled and active so breaches and threats can be detected

Future-proofing the workforce

Being well-versed in LLM usage should, therefore, be a priority for businesses that want to integrate AI into their operations. However, doing so will require bridging the digital skills gap that currently weakens the UK workforce.

According to research by Salesforce, only one in ten workers have key AI skills. Moreover, of the 11,000 employees that were surveyed, a scant 14% said their role involved related digital skills like encryption and cybersecurity.

If businesses are to protect their information from unwelcome eyes, it’s paramount to train employees to use new technologies and systems that are inevitably being normalised in the office.

This is key for the existing and future hires. According to research by AND Digital, 20% of workers did not apply for a job and 26% did not seek or achieve a promotion because of their lack of digital skills.

Conversely, research has revealed that 79% of small business owners in the UK consider the adoption of new technologies to be critical for future growth. However, 29% said a shortage of skilled workers poses a high or very high risk for their business.

Therefore, businesses that commit to upskilling employees and equipping them with the in-demand arsenal of digital skills are more likely to benefit from business growth unhindered by data leaks and cybercrime

Dragons’ Den star and retail tycoon Theo Paphitis has dismissed the government’s rumoured proposal to curb rising food prices as “another one of those hair-brained, headline-grabbing, insincere schemes.”

Speaking to Startups this week, Paphitis – who is Chairman/Owner of retail giants Ryman, Robert Dyas, and Boux Avenue – rubbished the policy. He claims that the government is “using the idea as a distraction knowing full well that it’s not viable.”

Earlier this week, the government received backlash from UK retailers and supplier bosses over a plan to cap prices for basic foods such as bread and milk.

The latest official figures show food inflation reached 19.1% year-on-year in April, a near record increase. The rate is higher than inflation in the wider economy (8.7%) and has put pressure on the government to get a grip on the upsurge.

Elaborating further, Paphitis warns that, as the cost of raw materials continues to rise, the move could prove counterproductive. He argues it could lead to even higher price tags down the supply chain, which would put strain on small partners and retailers.

“If you fix prices at a point in the chain and input costs aren’t going down, something somewhere else in the chain has to give,” he states. “This will result in food shortages which in itself will increase costs.”

Paphitis calls for business rates reform for small firms “teetering on the edge”

Alongside managing his business portfolio, Paphitis is a prominent campaigner for UK SMEs.

In 2011, he created the support network, #SBS Small Business Sunday. Capitalising on the large Twitter following he gained from starring on Dragon’s Den, the retail tycoon shares six small businesses on Twitter each week, to help boost their social media presence.

“I realised just how useful being able to market to 50,000 people would have been when I was starting out,” Paphitis tells Startups.

SBS has since grown to become one of the UK’s leading small business networks. It has also become a particularly valuable source for SMEs in the current, poor economy.

Many UK SMEs are struggling to stay afloat amidst a cocktail of hiked energy bills, talent shortages, and the cost of living crisis. Startups asked Paphitis what he thought the UK government should be doing to help small businesses balancing on today’s economic tightrope.

“Small businesses are teetering on the edge at the moment,” he cautions. “The government can start to help by throwing them a life raft to alleviate the burden that our archaic business rates taxation system puts on brick-and-mortar retailers.”

Industry leaders have been lobbying for the government to make the business rates system – specifically the way rates are calculated – more transparent for years.

New rateable values were introduced at the start of the new financial year. On average, the total value on non-domestic properties in England and Wales increased by an average of 7.1%.

In early April, Whitehall announced the new Non-Domestic Rating Bill 2022-23, which introduced a range of minor amendments to business rates. However, critics said the changes did not go far enough.

Entrepreneur partners with NatWest for ‘State of the Nation’ roundtable

Paphitis’ views on how the government could better support small companies were aired to Startups ahead of a roundtable being held to discuss some of the pressing issues facing today’s SMEs.

The roundtable is open exclusively to the 3,750 small business owners who have won the #SBS Small Business Sunday award so far. Paphitis has teamed up with long-standing partner NatWest to host the event in London on Thursday June 29.

Six chosen firms will be hosted at the NatWest Group headquarters. They will have the chance to have lunch with Paphitis and members of his team, as well as NatWest representatives.

Off the back of the working lunch session, the SBS State of the Nation report will share findings and expert advice for small firms, to help brighten the present, unfavourable business outlook.

Commenting on the upcoming roundtable, Paphitis describes SMEs as the lifeline of the UK economy: “This event is a fantastic opportunity for #SBS small business owners to come together and get under the bonnet of small business, sharing their experiences so that they can learn from each other and navigate the choppy waters we are currently facing.”

Debbie Lewis, Regional EcoSystems Manager, at NatWest, adds: “We look forward to working with #SBS Small Business Sunday to continue to champion the entrepreneurial journey, supporting aspiring individuals as they transform their visions into reality.”

In this year’s Startups 100 index, we turned our attention to Kind Bag, an ethical accessories brand, to shed light on its commendable practices. Now, it appears our recognition was well-founded as Kind Bag, the sustainable bag brand, has achieved remarkable growth for the third consecutive year, surpassing expectations by generating a staggering £940,000 in revenue.

This growth can be attributed to the surge in sales within the UK market and the expansion of export channels, particularly in the United States. Kind Bag’s commitment to repurposing over 5 million recycled plastic bottles has resonated with eco-conscious consumers, leading to their strong performance.

Here, we take a closer look at Kind Bag’s inspiring journey, uncovering the secrets behind its commercial success and exploring the strategies that have propelled it forward in the face of adversity.

How Kind Bag is thriving on the wave of conscious consumerism

Kind Bag’s UK sales increased by 55% compared to last year. It established a presence in the United States this year with the opening of its warehouse in Wisconsin, and successfully exported products to countries such as Australia, Spain, Italy, and France, among others, resulting in global sales accounting for approximately 50% of its total revenue.

The products are made from RPET fabric, created by recycling plastic bottles that were originally destined for the ocean or landfills. Not only does repurposing these bottles reduce plastic waste, but it also prevents harm to any marine ecosystems. 

The company prioritises ethical trade practices and has maintained long-term relationships with the same ethical factories since its inception. This dedication to ethical production ensures fair treatment of workers and supports sustainable supply chains. 

By aligning its company values with tangible actions, Kind Bag goes beyond mere claims of sustainability, making it a true champion of ethical and eco-friendly practices rather than engaging in greenwashing practices. From its core production process to its choice of materials and partnerships, the company demonstrates a holistic approach to sustainability. 

A female-owned and female-run business

One of the things the Startups judges loved about Kind Bag was the fact that it prides itself on being a female-owned and female-run business. 

Founder Maria Rodriguez expressed her delight at the company’s consistent growth amidst the UK’s current economic challenges and has ambitious plans for Kind Bag, aiming to more than double its size within the next year. Despite the cautious buying patterns of retailers and stockists, Kind Bag has prioritised nurturing its business relationships and implementing new procedures and systems to maximise performance. 

“We have chosen to really nurture the accounts we work with,” she states, “as well as spending time and money implementing new procedures and systems to ensure we maximise the company’s performance.”

Kind Bag has also moved into producing bespoke bags for other much-loved British institutions including English Heritage, Kew Gardens, Oxfam and the Southbank Centre.

Conscious consumerism on the rise

Sustainability was a continuing business trend for 2023. 

It remains a key consideration for 29% of consumers especially when shopping for clothing, with this figure rising to 36% among Gen Z’s (18-24 year-olds), and 62% of consumers worldwide refuse to compromise on sustainability even in times of economic uncertainty, according to a recent Shopify study. 

Kind Bag has capitalised on this trend by offering environmentally conscious shoppers a range of design-led, eco-friendly accessories, produced using recycled plastic bottles, and captured the loyalty of these environmentally-conscious consumers, with 20% of their customers being repeat purchasers.

Kind Bag’s success appears to be a testament to its organisational culture increasing the importance of conscious consumerism and the demand for sustainable products in the market. 

Rodriguez observes: “Sustainability continues to be the single biggest focus in fashion as increasing numbers of consumers consider the environmental impact of their shopping choices. 

Here at Kind Bag, we have a completely sustainable and ethical production process. Everything from the product itself, the ink we use, through to the packaging has been carefully chosen with the planet in mind.”

To see more brands that put purpose alongside profit, check out our SU100 sustainable startups shortlist.

The UK government is set to invest £900m in an exascale computer as part of its national artificial intelligence strategy.

Capable of carrying out more than one billion billion simple calculations a second, it would be used to train complex AI models so the UK can build its very own BritGPT.

The urgency of constructing a homegrown GPT is characteristic of an intensifying technological ‘arms’ race, where countries are competing to lead the AI revolution.

However, as the UK gets caught up in the politics of regulation and innovation, SMEs are increasingly being cast aside.

The dependence problem

BritGPt is, in principle, designed to maximise the country’s potential in AI and to give tools to researchers to better understand new drugs and climate change. However, there is also an existing political undercurrent.

According to Haydn Belfield, author of ‘ ‘Great British Cloud and BritGPT’ ’, our progress is dependent on a vulnerable and expensive AI supply chain that encompasses chip designers, data centres and AI developers in Silicon Valley.

Foundation models are expensive to train. Based on Belfield’s research, anything from £10 to £100 million just in computer costs with the potential to increase to the £1 to £10 billion range.

As a result, there’s been a near monopolisation of the provision of foundation models. The ‘Big Three’ AI cloud providers are all based in the US – Amazon Web services, Microsoft Azure, and Google Cloud.

Whilst the US is a strategic ally, logistically, problems could still arise. For instance, undersea cables could be damaged, prices could hike, or there simply could be a lack of oversight and control.

Although building cloud capacity that is comparable with the Big Three is not an overnight task, the UK can do two things to keep itself competitive.

Firstly, it can build up publicly owned cloud capacity that breaks a potential dependency cycle with the US. Secondly, and most importantly for SMEs, it can play to its key strengths in chip design, foundational model training and fine-tuning.

The role of SMEs in the UK’s AI Revolution

The AI business population in the UK is overwhelmingly comprised of startups or small businesses. Of the 3,710 UK companies that are currently registered in the country, 28% were small businesses and 60% were micro businesses.

The problem? 71% of all AI revenue (£7.6bn) was generated by large firms despite just making up 4% of the AI business population. On the other hand, SMEs companies together account for just over a quarter (£2.8bn) of AI revenue.

The skewed contribution between SMEs and big tech is indicative of how disparately capital is being allocated. Worryingly, it shows the risk aversion that continues to handicap SMEs seeking venture capital investment in the UK.

As a result, AI SMEs are being forced to look across the Atlantic for funding. However, rather than a recent problem, this is becoming an ongoing trend for startups in the country.

Autonomy, DeepMind, SwiftKey, and VocalIQ are all British AI and machine learning startups bought by US tech giants like Google and Microsoft.

The technologies these SMEs developed displayed potential to be market leaders. However, to grow, they required high levels of investment that the UK market was simply not offering. In the case of DeepMind, whilst Google acquired the company, a a team remained in London.

In other words, the UK has no shortage of AI talent. Some of the best universities of the world are based in Britain and it has one of the most vibrant environments for startups.

However, to avoid this potential brain drain, the UK needs to play to its strategic advantages in AI and give the right support to its startups that are helping drive the artificial intelligence revolution.

Whilst BritGPT is a step in the right direction to be technologically competitive in AI against giants like China or the US, the rollout needs to be more nuanced.

Otherwise, the UK risks falling victim to the growing monopolisation of funding and resources for big tech companies whilst startups struggle to find finance on home turf.

Nourished, a 2023 Startups 100 Index alumni, won the King’s Award for Enterprise in the Innovation category by recommendation of the Prime Minister to King Charles III.

The award, now in its 57th year, is one of the most prestigious accolades a business can be given in the UK and celebrates businesses that champion international trade, innovation, sustainable development, and opportunities for social mobility.

Launched in 2019, Nourished uses 3D printing technology to produce personalised health supplements in the form of stacked gummies.

Capitalising on the health and wellbeing boom after the pandemic, CEO Melissa Snover found an innovative solution to compartmentalising all supplement requirements into one stacked gummy. Our Startups100 judges thought Nourished was filling a gap in the market and playing into the personalisation trend.

The technology makes use of science-backed nutrients and an intelligent logic recommendation algorithm to make taking daily supplements a quick and easy task.

In conversation with Startups, Snover said, “Innovation is at the heart of everything we do at Nourished.”

“We produce everything in-house from designing and creating our own manufacturing machinery to testing and developing our own product formulations and flavours. It is this unique approach which I believe was recognised in our King’s Award application and which ultimately gave us the honour of winning”.

A track record of success

The King’s Award is just another link in a chain of successes for Nourished. Back in 2019, the Birmingham-based startup secured £1.95m in the highest seed round ever raised by a female founder.

Nourished now employs more than 100 people across three sites in its birth city and is set to hit over £10m revenue in just its third full year of trading.

Previously, the health-gummy business has also placed in the 15th position in the 2020 Startups 100 Index. It also won the Growth Business of the Year at the Business Champions Award and the Elite Business’ Start Up of the Year award.

When asked why it’s important to apply for business awards, Nourished noted “It serves as a validation for your expertise, helping you to establish credibility within your industry.”

“Winning awards creates a sense of pride within your workforce, and encourages loyalty as they feel their efforts are valued and recognised by external entities.”

Ranking on the Startups 100 Index has also given Nourished added credibility. As they note in conversation with Startups, “We have received significant recognition in the press and social media as a result of coming 15th in the Startups 100 Index, which helps to build our brand awareness.”

Nourishing the future

The startup has already expanded into the US and has ambitious plans for the future. Snover told Startups, “We are currently preparing to launch a new product range in the UK, as well as expand into new markets in the EU this summer.”

It also recently took on a £2.5m investment from Suntory Holdings in a strategic partnership to support planned expansion into Asia in Q3.

Nourished’s success and momentum therefore continues to show what our Startups 100 Index alumni are capable of, as well as the importance of promoting innovation, growth, and funding for SMEs in the UK.

80% of people say they’re not concerned that artificial intelligence will replace them at work, according to a survey.

The survey conducted by ID Crypt Global, which sampled answers from 1,196 UK workers, found that 94% of respondents are doing nothing to prepare for the possibility of AI replacing them in the workplace.

Despite the perception that AI doesn’t pose a risk to their jobs, opinion is divided aboutAI’s overall effect on society. 47% said they think it will be harmful, 36% thought it would be beneficial, and 17% remain unsure.

That said, if the time comes when AI is the top candidate for their jobs, 52% believe that their employer and the government share responsibility for re-training them to take on new jobs that are undisrupted by AI.

A minority (14%), however, believe it should be an individual’s responsibility to ensure they are future-proofing their career against a potential overtake by AI.

Is AI a danger to jobs?

These findings follow Goldman Sach’s landmark AI report which predicts that AI could replace the equivalent of 300 million full-time jobs.

In fact, this has already started to happen. IBM announced that it would freeze hiring for jobs that AI can do, with CEO Arvind Krishna saying he believes 30% of his staff will be replaced by AI in the next five years.

So why is there such a mismatch between what employers and employees predict? On the one hand, it might be because of a misperception over how quickly roles are being fulfilled by automation tools.

According to research released in November 2022 by sociology professor Eric Dahlin at Brigham Young University in the US, “Those who hadn’t lost jobs [to robots] overestimated by about double, and those who had lost jobs overestimated by about three times.”

However, it’s not just a matter of the speed at which automation is overtaking humans. There is also the belief that the choice is binary.

But combining artificial intelligence with a human role is possible and in many cases preferable. Several sectors are already evolving with artificial intelligence used as a tool rather than an employee, because they still require exclusively human skills such as creativity, emotional intelligence and judgement.

Should we start future-proofing our jobs?

Whilst many don’t think AI will take over their 9 to 5, employers would be naive to not face up to the expected rise in demand for AI-related skills.

According to research by Salesforce, only one in ten global workers have in-demand AI skills. It’s estimated that the digital skills gap is costing the UK economy a whopping £12.8bn which means employers will be looking for people who can fulfil these future-forward roles.
Nine in 10 businesses believe they should prioritise digital skills for their employees, however, 58% of knowledge workers have never received digital upskilling from their employer.

The lack of training and mismatch between what employers want and what employees can offer led to 8.5 million vacancies in the first seven months of 2022.

Given the relative lack of training offered in workspaces, it would appear that employees need to start taking matters into their own hands.

Therefore, the answer to the question of whether AI will replace our jobs is more nuanced. It isn’t simply that AI will take over human jobs – it’s that people who are prepared for the AI revolution will be at the top of the hiring list.