Member Article

Let’s not tie SMEs up in red tape

The news that the UK is the fastest-growing of all the major developed economies is certainly welcome, but for small- and medium-sized businesses (SMEs) the wounds of the recession are still raw. After four years of struggle and survival, Britain’s SMEs know how quickly the wind can shift so it no longer fills the sails of the economy, but leaves businesses becalmed or driven back towards the rocks.

It’s in everyone’s interest that SMEs are positive about the future, after all they make up 50% of the UKs GDP contribution. But business confidence can be a capricious beast. Confidence often depends on a myriad of factors at both micro- and macro-economic level; is affected by local and global issues; and it concerns factors that are both within and outside their control.

The sheer diversity of the UK’s 4.9m SMEs makes it difficult to prescribe a universal solution to help support business. What can be done, however, is to listen to the most commonly occurring complaints and concerns expressed by SMEs themselves.

And while confidence for the year ahead is generally high among SMEs, there is no shortage of worries. Some of these are largely outside of businesses’ control, from the outcome and consequences of next year’s general election, to worldwide influences such as conflict and wildly-fluctuating energy prices. All of these have the potential to upset economic recovery; after all, in today’s globalised world, conflict overseas can have a direct impact on a business in Kettering.

Given the effect that global events can have on businesses, there is all the more reason to ensure that SMEs are given the support they need in their home market, and that their path is made as smooth as possible. To do that, we need to listen to the concerns of SMEs, and understand what is holding them back from reaching their full potential.

Some of these problems seem too perennial, but that is no excuse to tackle them wherever possible. One factor that is often cited is as a drag on business growth is the proliferation of government directives, such as overly-complex waste management regulations or restrictive health and safety rules. Recent research finds that half of SMEs say that ‘red tape’ is stifling their business, while that hangover from the recession concerns – the lack of bank lending to business – is also a major worry. Other significant concerns include skills shortages and recruiting new talent, which are illustrative of how businesses’ skills requirements have changed thanks to the digital revolution.

While the prevalence of these concerns do somewhat temper the wider message of business confidence, they do help point out how these businesses could be better supported.

Measures in the Autumn Statement to reform business rates are certainly a step in the right direction, and it’s great news that there is now consensus across the political spectrum that more must be done to support the UK’s 4.9 million SMEs. Cutting unnecessary barriers to business growth is clearly something that will bring great benefits in the short term, and make SMEs better able to weather whatever an unpredictable year will bring.

This was posted in Bdaily's Members' News section by Phil Scholes .