Tag Archive for Outlook

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Two in five small businesses face closure because of coronavirus

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Originally written by Timothy Adler on Small Business
Two in five small businesses face temporary closure because of coronavirus, according to productivity organisation Be the Business.
Thirty-nine per cent of small and medium-sized enterprises (SMEs) have already closed temporarily or plan to do so within the next month.
The research, conducted by Opinium, also found that 7 per cent of firms have already shut permanently, and a further 12 per cent think they are likely to do this within the next month.
>See also: Banks not cooperating with coronavirus loan, complain small businesses
And 23 per cent have made or are planning to make redundancies.
Responding to the coronavirus threat, SMEs say they are equally focused on managing cash flow (31 per cent) and accessing grants and government loans (31 per cent). However, the longer-term issue of supporting their staff was highlighted by a quarter (24 per cent) of firms.
As for the types of support and advice SMEs are looking for, this varies according to size.

For micro-businesses (those with fewer than 10 employees), cashflow is crucial, with 40 per cent stating they need advice on this
Small businesses (10-49 employees) are looking for support to access grants and government loans (31 per cent)
Medium-sized firms (50-249 employees) want

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The IFS calls for minimum wage cut to help businesses

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Originally written by Anna Jordan on Small Business
The Institute for Fiscal Studies (IFS) has called on the government to temporarily cut the National Living Wage (NLW).
They’ve also recommended delaying the next increase in the NLW which is due next month. The wage is set to increase by 51p to £8.72 an hour.
In a statement released yesterday (25 March), the IFS said that the government should seek advice from the Low Pay Commission on the best course of action.
A rise in welfare makes sense while an increase in wages does not in a time where the labour market is drying up, according to the statement.
“The substantial increases in benefits – for example in Universal Credit and in Housing Benefit – announced last week are clearly an appropriate response as the government tries to protect people’s incomes,” said IFS researcher, Tom Waters.
“Whether the planned increase in the National Living Wage to £8.72 an hour as from the start of April still makes sense is open to question.”
He goes on to say that the move to raise National Living Wage to £8.72 was announced in October 2019. The economy looked very different to the way it does now: “It is extremely hard to

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Government announces delay of IR35 reforms until April 2021

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Originally written by Anna Jordan on Small Business
The government has decided to delay the incoming IR35 rules due to the coronavirus pandemic.
Chief treasury secretary, Steve Barclay, said that the reforms will be pushed back to 6 April 2021. The move comes among a raft of announcements supporting small businesses last night (17 March).
However, Barclay stressed that it is “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”.
Relieved but still frustrated
Business experts have welcomed the news but are unhappy that the government intends to plough ahead in 2021 without further consultation.
Qdos CEO, Seb Maley, commented:
“The government has seen sense and made the right call in these unique circumstances. Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.
“It does give private sector firms vital time to prepare for reform, which can only be a good thing for contractors. What matters now is that businesses use this time wisely.”
Claire Brook, employment law partner at Aaron & Partners, thinks the announcement is overdue:
“Although this will come as welcome news to a huge number of employers,

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Budget 2020 what it means for small business – analysis and live blog

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Originally written by Timothy Adler on Small Business
UPDATED: Chancellor Rishi Sunak has announced a £30bn spending package to help mitigate the impact of the coronavirus outbreak.
Government to cover statutory sick pay for SMEs
Statutory sick pay will be available to all those advised to self-isolate from the virus. The government will refund the cost of statutory sick pay for up to 14 days to small- and medium-sized businesses at a cost of £2bn. This will apply to businesses with fewer than 250 employees.
Announcing his Budget this afternoon, the chancellor acknowledged coronavirus would cause “temporary disruption” to the economy.
Jonathan Richards, CEO and founder of Breathe, added: “As a small business owner, it’s reassuring that the government will cover the strain caused by sick pay, as well as offering significant loans and cash injections to UK small businesses.
Coronavirus Business Interruption Loan Scheme
A “Coronavirus Business Interruption Loan Scheme” will support up to a further £1bn lending to smaller businesses. The government will guarantee bank loans to small businesses on amounts of up to £1.2m. The government will cover bank losses of up to 80pc.
Business rates to be scrapped for certain businesses…
Business rates will be abolished altogether for smaller firms in retail, leisure and hospitality

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Chancellor cuts entrepreneurs’ relief lifetime limit from £10m to £1m

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Originally written by Anna Jordan on Small Business
In today’s Budget, Chancellor Rishi Sunak cut the lifetime limit on entrepreneur’s relief from £10m to £1m. He said that 80 per cent of small business owners will not be affected by the move.
For a round-up of announcements relating to small business owners, read Budget 2020 what it means for small business – analysis and live blog.
‘A missed opportunity’
Though hailed as a ‘sensible reform’ by Sunak, many industry experts wanted to see it abolished altogether.
Phil Hall, AAT’s head of public affairs & public policy, said:
“AAT is pleased that the Chancellor acknowledged many of the numerous negative points that this misnamed relief has, including that fewer than one in 10 entrepreneurs have been incentivised to invest because of it, that its name is misleading and that that 75pc of the £3bn annual cost of the relief goes to just a handful of individuals.
Having acknowledged all of those problems, it’s therefore very disappointing that the Government has failed to scrap it and has instead opted to restrict the relief from £10m to £1m.
There is an overwhelming body of evidence that indicates the relief does not achieve its policy objectives, that it’s extremely expensive, misguided, poorly

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One in five small businesses fell into their overdrafts last year

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Originally written by Anna Jordan on Small Business
Almost one in five small businesses have struggled with no cash in the bank, according to new research by Fluidly. The survey of 19,799 companies found that those having to use their overdrafts rose from 13.9pc in March 2019 to 17.8pc in January 2020.
Late payments, Brexit and economic uncertainty appear to be taking their toll as many businesses went into their overdrafts in nine of the 11 months tracked.
Plymouth was the worst-hit region at 35.7pc, followed by Southampton (34.3pc) and Peterborough, where around a third of businesses (32.8pc) have had to resort to their overdraft to survive.

RegionCompanies in overdraft at the end of the month (pc)

Plymouth35.7pc

Southampton34.3pc

Peterborough32.8pc

Shrewsbury31.1pc

Preston29.7pc

Stoke-on-Trent27.4pc

Manchester26.5pc

Bristol26.4pc

Milton Keynes26.1pc

York26pc

>See also: What are the best alternatives to a business overdraft?
Food and drink makers (34.7pc), product manufacturers (33.3pc) and farmers (32.6pc) have fared the worst over that 11-month period. This suggests that sectors investing large amounts upfront are suffering more.

IndustryCompanies in overdraft at end of month by industry (pc)

Food and drink manufacturers34.7pc

Product manufacturers33.3pc

Farmers (agriculture)32.6pc

Post and telecommunications31.7pc

Motor sales and repair31.3pc

Retail and trade30.8pc

Land transport30.4pc

Hotels and restaurants30pc

Construction29.5pc

Travel agents29pc

Last month, research from the Federation of Small Businesses (FSB) found that a growing proportion of finance applications (37pc) were being driven by

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Insights for small businesses on how to navigate uncertainty post Brexit

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Originally written by Partner Content on Small Business
Brexit was officially set in motion last month and the UK’s withdrawal from the European Union is already underway. From January 31, 2020 until the end of December 2020, the UK and EU will be in a transitional period of alignment with the EU during which both parties will hopefully negotiate new trading agreements. Interestingly, the implementation of the UK’s withdrawal from the EU is already throwing up some concerns about how UK businesses are likely to fare at the end of the transitional period.
Brexit will affect everybody living in the UK and in the EU to varying degrees and businesses on both sides of the divide must be ready to adapt to new realities as free trade of products and services and the free movement of people happen under a new set of rules.
A state of uncertainty
For the rest of 2020, businesses are likely to be stuck in limbo even though they are theoretically supposed to be operating under existing trade agreements. The fact that businesses don’t know how the business landscape, their relationship with EU counterparties, tariffs, paperwork, or shipping routes might look like in the next 10 months is precipitating

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Sajid Javid: there will be ‘no alignment’ with EU business rules after Brexit

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Originally written by Anna Jordan on Small Business
Chancellor Sajid Javid warned businesses that ‘there will be no alignment’ with EU rules after Brexit.
In an interview with the Financial Times, Javid said: “We will not be a ruletaker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year.”
The EU wants the UK to stay in line with its regulations in exchange for a zero tariff, zero quota trade deal but the government wants to create rules of its own.
Javid didn’t say which regulations he wants to ditch, causing more planning issues for business owners. Though he told the Financial Times that companies “have known since 2016 that we are leaving the EU,” but admits that “they didn’t know the exact terms.”
The post-Brexit focus will be on ‘human capitalism’, pumping money into ‘skills, skills, skills’ and supporting infrastructure schemes in the midlands and the north. More importance will be placed on regional performance rather than national economic performance, with a view to boosting growth rates to between 2.7pc and 2.8pc per year.
Not all businesses will benefit
Moving away from existing regulations has attracted criticism

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Reading has potential to be UK’s top entrepreneur hotspot

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Originally written by Timothy Adler on Small Business
Reading has the potential to be the UK’s top entrepreneurial hotspot providing it embraces digital technology, according to a report.
More effective use of digital technology by start-ups and scale-ups could boost the UK economy by as much as £34bn a year by 2030, says tech firm Atos.
Brighton, Cambridge, Cheltenham and Oxford were the other hotspots in the top five with the most to benefit from embracing technology.
>See also: If you want your start-up to succeed, move to Bristol
The consultancy has mapped the entrepreneurial potential of towns and cities for the first time.
Reading ranked top partly because over half of its population has gone into higher education; the high number of start-ups and existing business in the area, including 11,000 digital and tech firms; and an ethnically diverse population, which helps drive entrepreneurship.
“Digital technology is critical to unleashing the full entrepreneurial potential of the SMEs, start-ups and scale-ups in our towns and cities,” says the report. “Better use of digital technology can help entrepreneurs in all industries because while not every start-up business is in the tech sector, every start-up needs to embrace digital technology in order to compete.”
Atos makes three recommendations if policymakers

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Small businesses applaud Conservative business reform pledges

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Originally written by Timothy Adler on Small Business
Business owners have given the incoming Government’s plans to invest in infrastructure and reform fiscal incentives a thumbs-up, according to two new surveys.
Both surveys, one from the Federation of Small Businesses and the other the Institute of Directors, were done post-election, when the Conservatives won a landslide majority.
Since then, Prime Minister Boris Johnson has claimed to hit the ground running, keeping the lights in Whitehall for the first 100 days of his administration.
>See also: General Election results leave ‘unanswered questions’ around IR35
Seven out of 10 small businesses say that the new Government’s pledge to invest £5bn to guarantee gibabit broadband would have a moderately positive (35 per cent) or very positive (34 per cent) impact. For firms based in rural areas, the figure rises to 72 per cent.
And the pledge to uprate the Employment Allowance – a discount on national insurance bills available to small employers – from £3,000 to £4,000 is also popular, with two thirds (65 per cent) seeing this as a positive step.
Nearly two thirds (64 per cent) of small businesses believe Conservative business reform pledges to overhaul business rates and extend the existing discount for hurting retailers will be

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