Small businesses are facing challenges on many fronts, as new figures show.
One in every 427 adults in England and Wales were found to have entered insolvency in the 12 months to October, an increase over the same period a year earlier.
And when combined with a second year of above-average registered company insolvencies, the figure represents a worrying trend.
It comes on top of the Autumn Budget in which the government presented further challenges for small businesses, particularly those who have employees.
So a new initiative from leading finance and small business experts aimed at SME survival has, arguably, arrived at just the right time.
The Small Business Survival eBook, by Informi from AAT (Association of Accounting Technicians), combines the expertise of finance and business experts and is aimed at the UK’s 5.5 million SMEs, sole traders and freelancers.
And there are more issues on the horizon. The increase to employer NI contributions, combined with the decrease to the NI Secondary Threshold from £9,100 to £5,000, will result in business owners recalculating staffing costs and ensuring they can balance the books.
SMEs who typically employ people on the National Living Wage, especially those such as cafes or small retail outlets, will need to budget for the impending rises to that as well.
Although the increase to the Employment Allowance may help to offset these increases, it’s only small businesses with at least two employees or directors, earning above the NI Secondary Threshold, that benefit from this.
A number of AAT members, who serve the needs of more than 840,000 UK small businesses, came together to share concerns about how the Autumn Budget will affect their clients, in a panel discussion hosted by AAT President Michael Steed on November 7.
He said: “The feedback in the panel discussion was sobering and stark. The highest cost for many small businesses is wages, and, although the government has tried to not affect employees with the Budget, the reality is that they will be inadvertently hit.
“One member shared how his client was planning to give his staff pay rises in the New Year but no longer will be doing so as they need to find money to cover the National Insurance increases. Another member shared his client has paused plans to recruit another two members of staff next year, as he isn’t sure he can afford a higher wage bill.
The reality is that taking on another one or two employees, or equally, reducing headcount by one or two people, is the difference between surviving or not
“In a nutshell, UK small businesses need more support to expand and grow, and continue to provide opportunities for the 16.7million people they employ. Instead, it looks like some SMEs are stalling growth, through fear of being unable to afford headcount costs.”
The Small Business Survival eBook includes expert advice on key aspects of running a small business from 10 finance and small business experts. It covers vital topics such as keeping cashflow healthy, minimising business costs, adjusting pricing, marketing a business effectively and safeguarding a business owner’s mental health.
It also features inspiring stories from other small business owners, who have overcome challenges and difficulties, and are still going strong.
Grace Hardy MAAT, Founder of Hardy Accounting, who has many entrepreneurs and micro businesses on her books and contributed to the eBook, said: “SMEs simply don’t have the cash reserves big companies do. The reality is that taking on another one or two employees, or equally, reducing headcount by one or two people, is the difference between surviving or not for some SMEs.
“You can have some of the most brilliant brains behind a small business, but failure is rarely down to a lack of innovation, ideas or hard work; more often than not, it’s down to the finances. Cash flow issues, not having the money to cover wages or pay bills and no money to reinvest in product, are some of the main reasons small businesses have to fold.
Accountants are more than just people who complete the tax return once a year; we often become trusted advisers
“Business owners aren’t necessarily finance experts. They usually haven’t got accounting qualifications, can’t interpret a Profit and Loss sheet and may have never seen a cash flow document before.
“Accountants are more than just people who complete the tax return once a year; we often become trusted advisers, helping small business navigate when they need to register for VAT, whether they can afford to expand, or if they need to adjust their pricing to ensure the profit margins are right.”
The Small Business Survival eBook is launched by Informi – a free website dedicated to supporting the UK’s small business community. As a responsible business and registered charity, AAT delivers practical action to help build resilient and sustainable businesses, and a key part of that charitable activity is Informi.
Access the free eBook here
