Five ways to happier 2013 for small firms

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Last year was difficult for many Borders small businesses. They had to face declining footfall and investment and ever increasing overheads, and this is likely to continue into 2013.

Despite this, a range of recent surveys indicates that optimism is growing in the UK. Indeed the latest Federation of Small Businesses (FSB) Small Business Index reveals that small businesses are more optimistic about their prospects now than at the same time last year or the year before. Worryingly however, optimism is lower in Scotland, and there is no doubt that our businesses need a confidence boost.

Here are five things that the FSB believes will nurture cautious Scottish optimism and help our smallest businesses drive us back to growth:

First, we know that we need more private sector jobs in the economy. We know that our smallest businesses have the potential to recruit more people than they currently do. And, we know that for small and micro businesses, taking on staff – particularly their first member of staff – is often a daunting milestone.

But expanding the workforce in businesses with a handful of staff can change the character of that business and dramatically increase capacity. The latest research from the FSB shows that Scotland’s smallest businesses could take on more staff with some practical support. So we need to see resources diverted from existing Scottish employment schemes towards projects better tailored to the business needs of the smallest employers.

Second, we need to get businesses out of the spare room and into our town and village centres – a key stage in the development of most businesses. Moves such as rates discount schemes will encourage more businesses to bring empty shops or offices back into use.

When the Scottish Government’s Town Centre Review Group reports in the spring, we must see a renewed focus on getting as broad a range of businesses as possible trading in our towns – and that means ensuring businesses have access to the sort and size of premises they really need. Unfortunately, current proposals to close the courts in Duns and Peebles town centres will have a detrimental effect on the footfall small businesses based there need.

Third comes action on overheads, such as fuel, finance and utilities. Asked about the cost of running their business, 73 per cent of Scottish FSB members said it rose during the final quarter of 2012 – with fuel and energy bills disproportionally hitting businesses in rural areas such as the Borders.

While the Chancellor’s decision to cancel the proposed fuel duty increase in January was welcome, more needs to be done in 2013 to give firms some certainty over costs.

Next we must get smart about regulation – the bane of FSB members’ lives. The Scottish Government’s Better Regulation Bill, set to be unveiled this year, is a good opportunity for Scotland to become a model of proportionality and consistency when it comes to regulation. Why should a business based in the Borders have to comply with regulation implemented differently in each local authority area? A consistent approach to regulation by all local authorities in Scotland will lower a significant barrier to trade for small businesses.

On the other hand, real time information, one of the biggest changes to the payroll system in the last 60 years, is due to come into force in April. Lots more work needs to be done to ensure that small businesses aren’t hit hard by this change.

Finally, we need the confidence to invest. Mirroring the lower level of confidence felt by Scottish businesses, our small businesses are investing less than in the UK as a whole. A loss of confidence led to capital investment intentions falling in the third quarter of 2012 and, although they rallied towards the end of the year, latest figures show that investment intentions among our members in Scotland remain lower than in the UK as a whole.

The Chancellor’s decision in the Autumn Statement to increase the annual investment allowance from £25,000 a year to £250,000 will allow businesses to write off much more investment against tax and could boost capital spending in 2013. As investment spending is often a key driver of economic recovery, our largest companies sitting on the largest cash reserves could boost confidence by investing now for the recovery tomorrow.

May you enjoy a happy and prosperous 2013!

Gordon Henderson

Federation of Small Businesses