Attitudes Towards Enterprise

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The Government published its Enterprise Bill on 17th September, which aims to cement the UK’s position as the best place in Europe to start and grow a business. Measures in the bill include reforming the Business Rates Appeals system so that it is more transparent and easier to understand, shifting and reducing the regulatory burden on businesses and extending the Business Impact Target to include regulators. It will also change the way that the term ‘apprenticeship’ is applied.

But the measure that caught everybody’s eye – mine included – was the commitment to create a Small Business Commissioner.

The imbalance in bargaining powers between the smallest of businesses and large firms can be damaging. I’ve written before about the implications that late payments and killer clauses can have on SMEs, so it’s good to see the Government taking measures to combat these imbalances directly. It seems to have recognised and acted on the fact that small businesses often lack the money, expertise and confidence to challenge practices they believe may be against the spirit, let alone the letter, of the law.

The Small Business Commissioner should act as a friend to smaller businesses, helping them to resolve disputes quickly and easily whilst simultaneously providing advice about preventing future issues involving dispute resolution, late payments and contract principles.

The Commissioner is yet to be appointed but they will work closely with Small Business Minister, Anna Soubry. Ms Soubry has been very vocal about the Commissioner’s role and has emphasised her desire for them to pick up the phone and speak directly to CEOs of large firms. Ms Soubry has also asserted that the Commissioner will have the power to name and shame larger businesses who aren’t playing ball. Although this is a last resort, it demonstrates the seriousness of the Government’s commitment to crack down on unfair treatment of small businesses.

Looking abroad for inspiration

Elsewhere, the US has a government agency dedicated to maintaining the wellbeing of small businesses. The US Small Business Administration offers a wide breadth of advice on starting and managing a business, contracting, combatting fraud and also offers extensive loan programmes. The agency summarises its activities with three Cs – capital, contracts and counselling. Having boldly championed smaller businesses for over fifty years, the dividends of this approach are surely self-evident in the world’s most entrepreneurial country.

A country still in the teething stages of dispute resolution development is Germany, which proposed a draft bill early last year with the intention of implementing the EU 2011 Late Payments Directive into national law. Germany is famous for its powerful ‘Mittelstand’, which is hugely productive and has fuelled the country’s growth. By actively acting against late payments in consumer transactions, they are turbo-boosting their position as one of, if not the best countries for SMEs in the world.

The UK may be slightly late to the party when it comes to championing SMEs but for my part, the movement to bolster their voice is laudable and one which I think will be valuable. With the efforts of the USA and Germany for guidance, the UK Small Business Commissioner will be able to learn from its international counterparts and rely on the support of British businesses that want to see this new position wield the power it needs to get SMEs the fair deal they deserve.

For my part, anything that seeks to challenge the culture of big businesses mistreating their smaller partners is to be welcomed.

Queen’s Speech: More questions than answers?

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In my last blog I revealed the policy ‘wish list’ of owners and decisions makers of 1,000 small and medium sized businesses. The overall take away was that SMEs want the Government to let them get on with running their businesses, without creating change simply for the sake of change. Last week in the Queen’s Speech, the Government announced its policy intentions for the year ahead with some positive signals for SMEs, though uncertainty still remains on some key issues.

Simplicity and stability are the two key desires of UK businesses, whilst the critical issues of productivity and EU membership are making small business owners across the nation ill at ease.

In the Government’s Enterprise Bill it was announced that “measures will also be introduced to reduce regulation on small businesses so they can create jobs”. The bill will focus on significant deregulation and the cutting of red tape, seeking to save UK PLC £10 billion in the process. The sentiment of this bill is welcome because a lighter burden would simplify the work of SMEs, providing more freedom and independence with less confusion and restrictions. But SMEs require clarity around how such a substantial saving of £10 billion will be made – with intricate details of where and when the red tape will be cut. Many hope the Government will disclose these details in July’s budget in order to provide full transparency and clarity to business owners across the country.

Another important feature of the Enterprise Bill will be the establishment of a Small Business Conciliation Service (SBCS). The service will operate with the sole purpose of settling business-to-business disputes such as late payments issues, preventing the need to go to court. In our recent survey, a fifth of business owners polled said that legislating to tackle late payments was an immediate priority. It is high time that late payments become an anomaly, rather than an ever-present feature of life for SMEs.

The prospect of an in-out referendum on the EU became a reality in last week’s speech as it was announced that “early legislation (will) be introduced to provide for an in-out referendum on membership of the European Union before the end of 2017”.

The issue of the UK’s relationship with the EU will continue to be a thorn in the side of small businesses as this uncertainty has hugely detrimental implications for stability and future prospects. Our research shows that a third of business owners want to see a commitment to remain in the EU from this Government. These businesses do not have the resources to scenario plan for a potential Brexit and assess the potential risks to their business. Unless a decision is made to bring the referendum forward – as many are hoping – for the next two years, SMEs will be in the dark. They will be doing their best to prepare for a worst case scenario, instead of pursuing their most ambitious dreams for the business.

Start-ups and small businesses across the UK need certainty and security in order to flourish and this is the benchmark against which the new Government will be held to account.