prabhuAfter a tumultuous few years for commerce in the UK and worldwide, there’s now renewed hope that the coming years will see business getting back on its feet. Brexit, the pandemic and a merry-go-round of Prime Ministers left the UK economy in a precarious state, with large and small businesses craving stability, support and clear direction from government.
The recent general election delivered a government with a clear majority that should enable them to deliver on their manifesto and create the solid base business needs to thrive.
Announcing 40 new bills at the State Opening of Parliament, King Charles said his government will, “take the brakes off Britain” and that stability will be “the cornerstone” of its economic policy.
But what does this mean in practical terms? And what promises has the Labour government made to small businesses and entrepreneurs?
Easier access to banking services
Every businessman knows that cash flow and liquidity are crucial to keeping the wheels in motion. One of the new PM’s first promises is to make it easier for small businesses to access funding and banking services.
In his manifesto, Sir Keir Starmer promised to unlock the supply of finance that small businesses require to launch, build and grow. This policy includes a commitment to improve the British Business Bank and enhance its offering to make it quicker and easier for SMEs to obtain funding.
This policy forms part of a wider commitment to boost innovation and tap into the skills and knowledge of young entrepreneurs who are keen to make their mark and just need the opportunity to do so. Spinoffs from universities are at the heart of this scheme.
UK universities are renowned as some of the best in the world, but the research carried out is not always put to the best use. Increasing the number of spinoffs and making funding more accessible to entrepreneurs is designed to harness this untapped potential and help keep Britain at the centre of the digital transformation.
Labour’s plans also incorporate a return to more traditional banking services. In May this year, Which revealed that more than 6000 bank branches have closed since 2015 – with more planned.
Chancellor Rachel Reeves wants to reverse this trend by opening 350 Banking Hubs throughout this Parliament. These hubs will be on the high street and enable businesses and consumers to access multiple banking services in one location. Hubs are not a new idea, but the current scheme is run on a voluntary basis. The new government plans to give the FCA (Financial Conduct Authority) powers to determine where hubs are required and compel banks to be part of them. The move is expected to help rebuild high streets, along with new police powers to tackle anti-social behaviour and make town centres more appealing.
A fairer deal for small businesses
Labour has been keen to position itself as the party of business over recent years. In preparation for what he hoped would be electoral success, Keir Starmer has been in regular contact with business leaders to ensure his party could hit the ground running.
As mentioned, cash flow is crucial for small businesses, and the new PM has promised to tackle the issue of late invoices. In March 2023, the Federation of Small Businesses (FSB) reported that 52% of SMEs have been affected by late payments, with 37% resorting to taking out credit.
The government has vowed to introduce measures to tackle this problem by making it harder (and more costly) for big businesses to get away with late payments. It’s estimated that dealing with this issue could free up £2.5 billion across the UK economy. That figure only represents those funds not yet released and doesn’t consider the subsequent increase in productivity. Liquidity will enable entrepreneurs and small business owners to focus on growth rather than chasing late payments.
In its last budget before leaving office, the outgoing Conservative government tried to bring in rules to tackle the problem of Empty Rates relief. Leading up to the election, the Labour Party announced plans to go even further and completely reform business rates to level the playing field.
Business rates have traditionally been a significant source of income for UK governments. Overhauling them is no easy task, but it’s a necessary step in the world of modern commerce. Bricks and mortar businesses demand it and, with rate relief being used as a way to help high street stores recover from the pandemic, now seems a good time to find a suitable solution to a problem highlighted by the Treasury in 2022.
Labour has also promised that at least one small business will be included in the tenders for every public contract that comes up for renewal. Big businesses have typically dominated this sector so just including smaller firms in the process is a step in the right direction.
How to set up a new business in the UK
As part of its trade strategy, the government plans to not only improve access to funding but to make running a small business easier across the board. Addressing skill shortages, removing export issues and offering a central hub for advice are all ways they aim to do this.
A commitment to innovation, funding support and a level playing field is expected to see an increase in the number of small businesses and entrepreneurs taking the plunge over the next few years.
However, it’s still important that any budding entrepreneurs set themselves up properly. Before you can start applying for finance or worrying about business rates, the first and most important thing is to get your foundations right.
The first and most important thing is a solid idea. We’d all love to do what we like for a living, but there must be a demand for what you offer. It might be that nobody yet knows they need it, but for a business to launch, it must solve a problem for its target audience.
That audience must be specific. Branding is crucial to stand out in a crowded market and marketing efforts need to cut through a lot of noise. The good news is that there are so many marketing opportunities available these days. It’s just a case of choosing the right one.
The same advice can be applied to finding a business bank account. Traditional banks typically offer business accounts, but they’re not always right for every business. Fintech services have become increasingly popular in recent years thanks to a reputation for speed and efficiency, particularly for international transactions. According to Airwallex, every new business should compare the rates and services available across a range of traditional and fintech banking services to make the right choice for them, helping them understand what could help drive revenue or profit gains..
The future’s bright for UK business
Regardless of the colour of its rosette, a new government often heralds a period of hope and expectation. Just as it’s a key aspect of business, change is crucial in politics too. Nothing can stay the same forever and a fresh approach can bring about new ideas.
We don’t yet know what the next five years will bring, but so far there appears to be a growing sense of optimism that we’re entering a positive phase for UK business, particularly startups and SMEs. The new government has a mandate to deliver what it promised small business owners in the UK. So far, the future looks bright.
