What does the general election result mean for small business growth?
9 min read
14 May 2015
In the aftermath of the general election returning a majority Conservative government, Russell Gould, COO at Everline and ezbob, gives his thoughts on the issues that David Cameron and his administration need to focus on.
Small businesses were uncommonly high up on the agenda during the recent general election. Although the leading parties have realised for some time that the potential of small businesses to boost economic growth in the UK remains largely untapped, the issue was more central to their campaigns than ever.
The realisation is that without addressing the issues hampering their growth, small businesses cannot fulfil their expansion plans and contribute to the economic recovery. As a small business owner, the opportunity of having your needs catered to is not one to be missed. Therefore, as the new government finds its feet, it’s worth making sure you’re aware of what help is currently available to you and how proposed Conservative policies correlate to your business needs.
Since the election results, the Federation of Small Businesses has spoken about the needs of small business stating that the organisation’s research found access to finance is one of the top ten issues small businesses will be looking for the new Conservative government to fix. This article looks at this pressing issue as well as the skills shortage facing small businesses.
The Conservatives have repeatedly talked about the importance of small businesses to the UK economy and according to their manifesto, small businesses will continue to get a good deal. The announcement of Anna Soubry’s appointment as minister for small business, a newly-created role as part of Cameron’s cabinet reshuffle, cements this commitment.
Improving your access to finance
It’s no myth that small businesses need better access to working capital in order to improve their cashflow and fuel economic growth. In fact, research undertaken by Everline and the Centre for Economic and Business Research (Cebr) towards the end of last year found that although small businesses have big growth plans for 2015, they’re unable to carry them out due to a lack of finance. The reality is that in the current market, most SMEs will only approach larger banks when seeking business loans, even though the process can be time consuming and the rejection rate is around 50 per cent.
The e-lending market is growing, offering small businesses a solution to the problem but awareness of where to get instant business loans remains relatively low. Recent efforts by the previous government such as passing the Small Business Enterprise & Employment (SBEE) bill, which forces banks to share SME credit data with alternative lenders, will make it much clearer for small businesses to understand and access all their financing options upfront but much more still needs to be done.
The Conservative manifesto appears to continue this level of support for small businesses with promises including the expansion of current initiatives such as the British Business Bank. The Bank also recently announced plans to build on SBEE Bill legislation in 2016 with a new programme to facilitate the process for traditional lenders and big banks to refer small businesses that have been rejected for small business loans to alternative financing options.
If you’re largely unaware of the alternative finance options available to you, you’re not alone. Many are unclear on the benefits of using emerging lenders who can provide fast, flexible business loans specifically designed to meet the needs of small businesses. However, judging by the steps that have already been taken by the current government and how high the issue of boosting small business lending is on the election agenda, the future is looking much clearer.
Beating the skills shortage
Everline’s research with the Cebr also found that small businesses are unable to carry out their growth plans due to a lack of workers with the right skills. The London Stock Exchange Group’s recent “1,000 Companies to Inspire Britain” publication found that boosting the most promising “magic 6 per cent” of the UK’s four million SMEs would create as many as 230,000 new jobs and add £38bn to UK GDP. These fastest-growing companies across the UK were not only in the digital and technology sector but also in the manufacturing, construction and engineering industries.
Unfortunately, these sectors require workers with STEM (science, technology, engineering and maths) subject skills, an area where the skills shortage is most apparent. The subject areas are not taught strongly enough in schools and children are not made aware of the potential careers affiliated with them. To make matters worse, the opportunities to learn skills related to STEM subjects post-school are limited too. There is also the problem of a lack of digital skills for small businesses to tap into. The digitalisation of business is fast moving and in order for them to keep up, new talent needs to be up-to-date with the latest technologies and tools to facilitate business growth.
The Conservative manifesto includes provisions to create three million new apprenticeships by 2020 and to take steps to nurture entrepreneurial and digital skills in schools. These proposed policies will eventually grow the talent pool for you to find workers with the right skills to help you run your business. In the meantime, make sure you have a business plan in place which identifies exactly where you’re lacking in talent.
Be prepared for any outcome
Many small business owners are hoping that this general election will mark a huge milestone in their struggle for access to business loans and sourcing the talent they need to grow. Business leaders and commentators seem to agree, anticipating strong growth for the sector in the coming years.
The Conservatives have realised that a thriving small businesses sector is essential to a sustainable economic recovery however, as we all know, election promises are not always fulfilled. We can almost guarantee a few things – reduced red tape, a review of business rates and a raft of tax cuts – however it is much harder to establish their impact. For small business owners, it is vital to understand the current market so you can take action when new help is made available to you. Knowing what this help is, as well as when and how to take advantage of it, will help set you apart from your competitors.
Everline and ezbob offer customers a simple, frictionless and transparent process. Using up-to-date business data and innovative technology to make responsible, real time, automated risk decisions, ezbob and Everline have collectively provided over 5,000 business loans and lent over £54m to UK small businesses since their inception in 2012.