Government growth plan leaves small firms fighting to survive

Seven in ten SMEs have given up on growth

Government growth plan leaves small firms fighting to survive

The Government wants growth in every postcode, but seven in ten SMEs are concentrating on survival or stability—and only 2% are pursuing ambitious growth. New research reveals a damaging gulf between what Westminster thinks businesses need and the pressures actually preventing them from expanding.

The Foundations of Growth have Crumbled

A report this month (8th Sept 26) tells us what small and micro business owners already know: most small businesses are focussed on survival rather than growth. Sad but true and particularly relevant for the Government drive for growth in every postcode.

Building the Foundations of a Better Business Environment is a report commissioned by the Association of International Certified Professional Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA). The report is available on the website: AICPA & CIMA | AICPA & CIMA and the findings will be useful for any government minister who reads them.

The main 3 findings are:

Most small and medium businesses are prioritising resilience over growth;

the barriers holding them back are not the ones dominating the policy conversation being had in government;

and where the Government does recognise the challenge, the policy response is inadequate.

Ambitions

There’s broad support for locally driven growth, in principle, but small businesses say they’re operating in an environment that doesn’t make growth possible. The policy and economic conditions don’t allow them to realise their ambitions. A quarter say their ambition is simply to survive and another 45% say they want stability.

That’s 70% saying growth isn’t on their radar. Of the rest only 2% are aiming for ambitious growth. 70% also say the Government’s growth plan isn’t clear and 15% didn’t even know the Government had a growth plan.

Wishlist

Tax is at the top of the list of things stopping businesses from growing and scaling. When asked what one thing would most help businesses in their local areas grow the list was:

·         Cut business rates

·         More consumer spending power

·         Reduce National Insurance for employers

·         Cut the tax burden

·         Better transport and infrastructure

·         And less red tape and regulation.

There’s more useful stuff in this report and too much to go into here, but it has the kind of figures that might sway thinking at policy making levels.  

If businesses are at the stage where they feel they can’t grow because the demand for their products and services isn’t there, the volume and complexity of regulation and compliance requirements is too great and that frequent changes in government policy is making it hard to plan ahead then the Government has to take notice.

Shift the Dial

The Budget coming up on 28th October is a good time for the Chancellor and the Prime Minister to shift the dial. They recognise that economic decisions work better when shaped by local needs and that small businesses are vital to the UK economy, employing the majority of the private sector workforce. Now it’s time for them to work out how to take the steps the businesses are telling them they need and get that growth agenda back on track.