A key driver of economic growth in the UK is the creativity and innovation of the more than 5 million small- and medium-sized enterprises (SMEs) around the country.[1] However, as 2023 kicks off in earnest, business owners are facing a changing market landscape that will influence their operations and ability to scale. Much of the small business community is in ‘significant financial distress‘, as reports indicate the number of firms on the brink of failure jumped by over a third at the end of 2022.[2] Many small businesses have already been forced to shut down. There were 82,000 fewer private sector businesses in 2022 than the year before.[3]
UK SMEs and accountants face challenges in today’s economy
The small business community drives economic growth and employment across the UK, making it critical that their voices are represented in policy conversations. Intuit surveyed SME owners and accountants and asked them to share their advice with policymakers regarding challenges they face, resources they need, and how policymakers could help them succeed. Key themes included:
- Challenges related to accessing capital, recruiting talent, and keeping up with the fast-moving pace of technology
- A call for tax stability, low-cost small business loans, government grants, and less red tape
- The need for better productivity tools and guidance to help navigate small business finances and general business growth
UK SMEs and accountants’ advice for policymakers:
We asked: If you could request one thing from policymakers to help small businesses, what would it be?
‘As a hospitality business, we need people to pay us a visit, and therefore ensuring that transportation (be it either public or private) is supported for all types of customers is a major priority. This means offering safe, affordable, and flexible forms of transport so that people can get in and out of a City Centre location when they want to.’ —Alper Dervish and Lee Nabbs, Founding Investors of Mockingbird Cinema, Birmingham
‘In order to maintain the UK’s technology success for startups and scale-ups and create more high-skill / high-pay jobs in the UK, reducing barriers to recruitment and research and development tax support for small companies must be front of mind for government in the months ahead.’ —Nish Kotecha, Chair and Co-founder of Finboot: Web3-Enterprise-Blockchain, Cardiff and Barcelona
‘I would request that policymakers reduce the tax burden on small businesses and provide them with grants and other forms of financial aid to cover the costs of necessary investments or startup costs. This would help relieve the financial burden of running a small business and enable small businesses to invest in their growth and development.’ —Simon Squibb, Investor, Entrepreneur, and Chief Purpose Officer at The Purposeful Project, London
‘Help small businesses get up and running but in a sustainable way. 16 million are employed within SMEs—that is a huge sector to engage in the conversation around sustainability. So, if we can help SMEs grow sustainably, there is huge potential impact.’ —Tommie Eaton, Founder of @BambuuBrush, Hitchin
‘Lower taxes for startups and small businesses in early stages when cash flow is key. A reduction in duty for small businesses would make it easier for businesses like mine to grow.’ —Andrew Parsons, Co-founder and Master Distiller at Sky Wave Gin, Bicester
‘Offer access to user-friendly software that meets the industry standards and makes compliance easy and affordable. IT support would make it easier to keep up with the ever-changing trends and which channels are currently fashionable.’ —SO & T Consulting Ltd, Leicester
‘Put more emphasis on growing entrepreneurial mindsets rather than on traditional “business support.” Additionally, help underrepresented groups in business better understand how to access policymakers to get their perspectives and experiences heard.’ —Charlotte Windebank, Managing Director and Co-founder of FIRST, Gateshead
‘I am amazed at how many people run small businesses when it can be so complicated. I used to manage a small business for someone else and learned a lot. If I was doing this without that experience, I would have needed more support much earlier in the process! Easier to understand and access finance information, like what taxes I should pay and when, without needing to use a specialist accountant would help SMEs.’ —Carly Straughan, Director at QLINE Consulting Ltd, Nottinghamshire
We asked: What can policymakers do to make it easier for businesses to grow?
‘Provide low-cost loans like during COVID-19… Small businesses should be cherished because without them all that’s left are huge faceless organisations. Too many good people with amazing ideas are giving up because it is so hard to make any profit with everything so cut to the bone.’ —Jane Belcher, Managing Director at SETT Surf Ltd, Mere
‘Many SMEs are severely impacted by unfavourable invoice payment terms imposed by bigger suppliers. This, in turn, can have huge cash flow implications for small businesses, forcing some out of business altogether. It would be great to see lawmakers help smaller companies by enabling more favourable payment terms.’ —Ali Jaw, FMAAT FCCA at Severn Accounting, West Midlands
‘There are a lot of good people doing good things, and we need to connect those people together and create mentor programmes with more experienced SME owners. People who have been through owning and starting up a business of their own.’ —Tommie Eaton, Founder of @BambuuBrush Hitchin
‘Offer support to raise capital in order to be able to focus full time on my business. Help businesses with startup costs.’ —Penelope Layzell, Leadership, Recruitment, and Wellbeing Expert at Penelope Layzell Ltd, Lincoln
‘Champion ethical and sustainable funding options that are values-based and purpose-driven. For example, offer tax breaks for social and environmentally conscious businesses, like R&D tax credits that focus on social and economic innovation as well as technological advances.’ —Charlotte Windebank, Managing Director and Co-founder of FIRST, Gateshead
We asked: What was the biggest challenge you faced last year in terms of growing your business?
‘Like many other businesses within hospitality, the continuing high energy prices have not helped, and it is not feasible to lower energy consumption overnight. Perhaps more could be done to enable local businesses to pool together resourcing for agreeing energy tariffs or specific funding support for switching equipment to lower consumption units.’ —Alper Dervish and Lee Nabbs, Founding Investors of Mockingbird Cinema, Birmingham
‘Planning for tax system changes that were then postponed for three to four years. Constantly changing compliance regulations means businesses can’t plan to succeed or plan to invest.’ —Johann Goree, Group Managing Director at OnPoint Accounting Group Ltd, Edinburgh, Perth, and Hemel Hempstead
‘Growing an audience and helping people at scale. Provide more education to students and small business owners on how to start and scale.’ —Simon Squibb, Investor, Entrepreneur, and Chief Purpose Officer at The Purposeful Project, London
We asked: What resources would help UK business owners succeed the most?
‘Cash flow was the biggest challenge we faced last year in terms of growing our business. Offer access to Financial Directors for advice. Or, access to a Virtual Financial Director to guide on cash flow and funding solutions would be valuable.’ —Relton Herron, Digital Strategist and Implementation Specialist at Relton Associates Ltd, Letchworth Garden City
‘Access to finance from various institutions like banks and lending agencies would be paramount in helping UK small businesses to succeed. The government should also introduce more growth strategies by offering grants to startups, especially those operating in the micro economy and technology sectors.’ —Ali Jaw, FMAAT FCCA at Severn Accounting, West Midlands
‘Small businesses do a lot in any recession to pull the economy out though they face increased costs and uncertainty with income. More new initiatives to support SMEs and help them grow in their local economies, such as apprenticeship incentives, would make it easier for my clients to grow their businesses.’ —Rachel Harris, Founder of @accountant_she, Stokenchurch
‘SMEs need more access to success coaches and mentors who can help guide them through their businesses challenges. Finding opportunities to network and grow our businesses is essential to success.’ —Gian Mahil, FinTech Consultant at The FinTech Guys, Central Bedfordshire
‘Hands-on support for STEM companies, especially incubators for emerging technology.’ —Paul Snider, Project Leader at Lethean Community Interest Company, Somerset
We asked: What can policymakers do more of to help businesses succeed? What has worked well?
‘There is still enormous potential to be unlocked if the UK can continue to drive investment into the sector. DCMS estimations show that if the UK’s digital ecosystems are supported, the sector’s contribution to annual GVA could grow by an additional £41.5 billion by 2025. In order to unlock such potential, we need to remove the barriers to investments into tech startups—which are often seen as high-risk and high-reward. Raising capital is still a major obstacle for most businesses, particularly for women and founders from Black, Asian, and minority ethnic (BAME) backgrounds. Further, there needs to be more support for diverse boards (gender and BAME) for all companies, not just the largest.’ —Nish Kotecha, Chair and Co-founder of Finboot: Web3-Enterprise-Blockchain, Cardiff and Barcelona
‘Embedding sustainable wellbeing in the workplace is so important to implement now. There is a lot of social change I am trying to achieve, yet there have been many funding challenges that have hindered me from helping to change this struggling area.’ —Penelope Layzell, Leadership, Recruitment, and Wellbeing Expert at Penelope Layzell Ltd, Lincoln
‘I would like policymakers to have an enabler and growth mindset going forward. Reduce the red tape and change the paradigm to help small businesses grow and find more opportunities.’ —Gian Mahil, FinTech Consultant at The FinTechGuys, Central Bedfordshire
‘A search engine highlighting available grants or support—everything is so disparate and difficult to find.’ —Jane Belcher, Managing Director at SETT Surf Ltd, Mere
‘Do all you can to protect the hospitality industries. They are often the only place where communities meet in rural areas. 2023 is going to be very hard for our industry. A lovely meal in a country pub is a great part of a day out—but if you don’t support it, expect the sign outside to change to FOR SALE.’ —SO & T Consulting LTD, Leicester
‘More “how-to guides.” There are certain parts of government websites that have great instructional videos but they are still lacking in a lot of places. Designated finance support, like someone I could call with questions instead of having to use an accountant would help small businesses succeed.’—Carly Straughan, Director at QLINE Consulting Ltd, Nottinghamshire
We asked: What have policymakers done in the past to improve success for your clients? What should they strive to continue to do or expand?
‘The COVID support did a lot to help my clients. Something similar but expanded during a recession would be good news for small businesses.’ —Rachel Harris, Founder of @accountant_she, Stokenchurch
Small business owners and accountants can thrive with support
Policymakers at all levels of government have an opportunity to reduce the regulatory burden for small businesses, enable them to feel confident about the decisions they make, and allow them to better plan for the future. Investing in small businesses, entrepreneurs, and the accountants that serve them has the potential to spur job creation, increase innovation, and yield tax revenue to bolster the UK economy. Let’s help the UK’s small businesses unlock their full potential.
1 Georgina Hutton, “House of Commons Library Business Statistics;” pg. 4.
2 Ric Traynor, “Red Flag Alert Report – Q4 – Toxic Combination of Risks Afflict UK Businesses as Concern Over a Surge in Insolvencies Grows.”
3 UK Department for Business, Energy & Industrial Strategy, “Business Population Estimates for the UK and the Regions 2022” pg. 1.