Today w
e round-up some of the key changes, and threats, for SMEs in 2015 from modern era “supply chain bullying” through to 500 year old tax systems.
Running an SME is never easy, indeed with 8% of businesses failing within 12 months and 59% within 5 years, the drive, commitment and determination of entrepreneurs of all shapes and sizes is all too rarely celebrated in the UK.
As such small businesses tend to be the most overlooked sector of the economy despite its critical role in the UK and can all too often suffer from this neglect. Some issues however are finally being recognised and tackled by the government however others, less so, one of these is our first focus: Supply chain bullying.
Supply chain bullying
The Federation of Small Businesses (FSB) has claimed in their latest survey that 1 in 5 of SMEs have been victims of “supply chain bullying” and claim they have been pushed to “breaking point” by excessive payment demands from corporate business in order to maintain commercial relations.
John Allan, National Chairman of the FSB said:
“Big companies are putting small companies in a position where they can’t fight back. The sense I get from talking to our members is that small businesses are fast approaching the breaking point.
“Brands that think they can continue to squeeze their suppliers with impunity may get a nasty shock when what they are doing comes to the attention of their consumers.
“When the public think of their favourite brands, they are unlikely to connect them with the sort of immoral payment practices which are becoming all too common across an increasing number of industries.
“However, it is clear that whenever these examples come to light, the public shares the same sense of moral outrage as the small firms that have to put up with them on a daily basis.”
One of the most prevalent activities is the concept of “pay to stay”, in other words a requirement for small businesses to pay fees to larger businesses in order to be stocked or marketed by the latter, that is in addition to any share and/or mark up that already exists on the product for the larger business.
The FSB highlighted other examples of so-called “supply chain bullying” such as slow payment terms to small businesses whilst the larger firms demand immediate and at time upfront payment.
Whilst the government and particularly Business Secretary Vince Cable have made noises as to the displeasure that such behaviour is viewed with little of substance has been done.
With increased pressure on firms expected in 2015 and with the food and hospitality industries most prone to failure as well as being the most exposed to this corporate behaviour a solution is sorely needed.
Holiday pay
Better news for SMEs has come however with the allaying of the worst fears over the bizarre EU ruling that threatened to hit employers with demands for back-holiday pay for workers earning commission and bonuses.
The government ruled that as of 1st July 2015 employee’s claims could not stretch back further than two years.
The business department justified this decision saying that it would:
“Reduce potential costs to employers and give certainty to workers on their rights”.
Typically out of step with the realism of commercial life, TUC General Secretary Frances O’Grady, general secretary of the Trades Union Congress, said the move was a “blatant attempt” to water down the tribunal ruling, saying:
“At the moment, the law on back-pay mirrors the rules on commercial debt, which can be pursued for six years in most of the UK. Today’s announcement smacks of treating workers as second-class citizens; treating commercial debt more favourably than wages.”
Quite why a failing employer is better than a paying employer is something only the Union lobby can explain.
Business rates
The peverse system of business rates has also come under review with a cap on business rates rises of 2% for 2015. Whilst that is ostensibly good news, the prior arrangement whereby rises were linked to inflation would have meant an increase of 2.3%, and so the Chancellor’s largesse is not perhaps as positive as it sounds.
Indeed business rates are amongst the most controversial costs SMEs face with the rateable system dating back as far as 1601 and which are calculated based on the “rental value” and size of the premise, only the latter of which is necessarily accurate. Based on the resultant ‘rateable’ value, similar businesses can pay wildly different business rates, a deeply unsatisfactory arrangement for many SMEs.
George Osborne has however announced a “full review of the structure” of these rates to be delivered by 2016 and for now has increased the discount available to premises with a rateable value of £50,000 or less to £1,500.
Business energy prices
With scant support being shown for SMEs life running a business can sometimes feel thankless however one, if not the, largest cost based that any SME faces other than stock and staff, is one which can easily be reduced without impacting on the productivity or efficiency of a business – energy.
From Autumn 2014 the gas an electricity markets saw a series of remarkable falls that saw it in early January trading 30% and 14% below the level of 12 months previously. Whilst prices are now again rising, with cold temperatures pushing up demand, the market still provides strong contracting opportunities to help SMEs save.
Having delivered an average saving for our customers of £1,865 in 2014 we are confident that again we can provide an all too rare, no strings, cashflow and profitability boost to UK SMEs.
Whatever the EU, Corporate world, Government, Trade Unions or HMRC throw at your business in 2015 you can be assured that Business Juice will be here, as a lone voice, to help you grow your business to its full potential.