In addition, when the insurance firm Aviva recently conducted a survey of small business owners, 43% stated that 2011 was a tougher year than they had expected, and only 7% expect to enjoy ‘good’ revenues in the first half of this year. Recent data from the Bank of England shows that credit demand from the smallest businesses – those with sales of less than £1m – collapsed by 35% in the three months to November. And in the latest evidence that companies are increasingly becoming self-funding, the same proportion said they had not asked for funds from their bank.
The Aviva poll suggests that 50% of small businesses have had to cut the money they draw from their business over the past two years – and, despite the Government’s efforts to encourage the growth of entrepreneurship, one in four small business owners report that they’re actually considering returning to the workforce as an employee.
Entrepreneurs have been coming up with suggested solutions, such as cutting corporation tax, increasing support for alternative funding sources and granting a payroll tax holiday for all new hires by young companies.
Joshua March, co-founder of app development businesses iPlatform and Conversocial, says, “For me, it’s very simple; it’s all about payroll taxes… When I was boot-strapping iPlatform, payroll tax was a third of all our outgoings every month – a massive amount.”
His comments are echoed by John McCallion, co-founder of ground transportation business Ground-Scope, who proposes a two-year national insurance exemption on all new staff recruited by young companies and a reduced corporation tax for five years after the formation of a company.
Other entrepreneurs, however, are sceptical that the financial problems of small businesses will be solved by government support. Speaking in favour of traditional laissez-faire capitalism, Ewan King, co-founder of film communications agency Content is King, argued, “The key to beating this recession is to worry about your own business, not other people’s… If your own house is in order, this slight contraction should be nothing to worry about.”
Off To See My Lawyer will endeavour to keep you informed of any public or private initiatives to assist the financial situation of small businesses and entrepreneurs over the course of 2012. We believe in the power of co-operation and solidarity – so if you have any concerns whatsoever, please do not hesitate to contact Jo Tall at email@example.com.