Member Article

Government obligation vs. personal initiative: Who's responsible for business growth?

Small business owners, by their very nature as entrepreneurs, are constantly looking for ways to grow and drive their companies forward. However, the process of building a successful business isn’t without its challenges. We recently spoke to over 500 SME owners about the struggles that they overcame when setting up their companies, and found that over a quarter (26 per cent) didn’t know who to turn to for advice in times of need.

Many of those who do look for support will look towards the government. It’s the responsibility of the government to ensure that there is development in all regions of the country, that taxes and business rates aren’t so steep that they hinder performance and that the UK is able to trade freely throughout the world.

However, it’s also true that that business owners themselves need to drive a significant amount of their company’s success. So who is really responsible for business growth in the UK? Here are some areas that require a little more clarification than others.

Business Rates

Business rates might not always be popular, but they are a vital part of our economy, providing the government with essential revenue. That said, it’s essential that the government imposes rates responsibly. Setting rates that are too high could result in finance management becoming a burden for many smaller businesses.

It’s important to remember that there is relief from business rates available under certain circumstances, and I would encourage any SMEs who are finding that financial woes are hindering their growth to investigate whether they are eligible.

Entrepreneurs should also bear in mind that business rates are partially determined by the value of the property from which the company is operating. Just 8 per cent of the businesses that we spoke to said they set up their business in a specific location to benefit from favourable business taxes. Many more could be benefiting from more accommodating business rates if they were to be more strategic in the location of their business.

For any business leaders who might be struggling with their business rates or are in need of advice, visit Gov.UK for further information.*

Regulation and Compliance

In all industry sectors, and indeed in businesses of all sizes, compliance seems to be the buzzword of the day. With the General Data Protection Regulation coming into play in May 2018, many small business owners are finding that they are quickly having to become experts in data governance.

It’s absolutely right that the government imposes regulations to ensure that data is kept safe, as we are increasingly seeing cases of personal information being abused. Likewise, all business owners should be conscious of the safety of their customers’ information. However, it’s important that the government ensures there is support available to help business owners, many of whom may not have had been previously responsible for data compliance, meet compulsory regulations.

Data governance is not a small undertaking and bringing in consultants is an expensive exercise. In instances such as this, guidance and support are vital.

For any small business owners who are struggling to get to grips with their own GDPR preparations, I recommend reading the Information Commissioner’s Office’s ‘Guide to GDPR’.**

A strong workforce

In a business that is growing successfully, entrepreneurs will need to respond to an expanding customer-base by hiring more staff. However, with a skill gap that is reportedly costing the UK economy £2.2bn a year, many businesses are having extreme difficulty recruiting suitable staff.

Training initiatives, such as internships and apprenticeships, are an increasingly popular way of upskilling new recruits. However, while a company is absolutely responsible for the hiring and training of its own staff, government support is needed to help smaller businesses to fund such initiatives.

Uncertainty about the future

Businesses rely on a stable, secure landscape to not only carry out their daily activities, but also to plan for the future. With Brexit looming but still very little information available as to what the UK will look like once we leave the European Union, as many as one-in-four SMEs say that their planned business growth is being hampered by the negotiations.

It’s the responsibility of business owners to ensure that they are adequately prepared to face the challenges of the business landscape. However, the government must also appreciate that entrepreneurs are reliant on stability, insight and a solid standing on the world stage in order to develop and grow their businesses.

Business Clusters

An especially effective way for entrepreneurs to take matters into their own hands and to develop a successful business is to establish a base within a cluster. A geographic region in which likeminded businesses gather, clusters are hubs of innovation and have much to offer growing SMEs.

Successful clusters become recognised for specialisms in particular industries, such as automotive manufacturing in the West Midlands, financial services in Edinburgh or transport and logistics in the East Midlands. As a result, they attract some of the best companies, talent and suppliers that an industry has to offer, creating an abundance of new business, recruitment, partnership and supply chain opportunities for growing SMEs.

In our research, we found that one in five (22 per cent) business owners didn’t know where to start when setting up their company. However, well over half (56 per cent) think that working with likeminded businesses would help their business in terms of productivity. Setting up shop within a cluster is therefore a very effective means for a business owner to spur their company on to greater success.

Where does responsibility really lie?

Founding and growing a business is a significant challenge, and while SMEs should be the helm of their own development, more support from the government is required to ensure that business growth is maintained in today’s challenging landscape. It seems to me that with a new year just around the corner, it’s time to find a new common ground between innovation on the part of SMEs and government backing.

• For further information on business rates, visit https://www.gov.uk/introduction-to-business-rates

** For further information on GDPR, visit https://ico.org.uk/for-organisations/guide-to-the-general-data-protection-regulation-gdpr/

This was posted in Bdaily's Members' News section by Nikki Flanders, Chief Operating Officer, Opus Energy .