Four in ten businesses have nearly closed in 2024 – London Business News | Londonlovesbusiness.com

The Entrepreneurs Network and Sumer, the UK’s leading mid-market accountancy practice for SMEs, release the United Growth Report, exploring the challenges UK SME owners face.

The report, which surveyed 610 entrepreneurs, across twelve UK regions will be introduced by Kevin Hollinrake, Shadow Secretary for Business and Trade at a special reception in the House of Lords, on Wednesday afternoon.

Is it all doom and gloom?

With so many businesses coming close to closing this year (44%) of respondents agreeing they have been in the past six months), is it any surprise that half (50%) of entrepreneurs also struggle to access financial support for their business?

Regarding taxes on business, most bosses (65%) agree that they are too high, which is also chosen from a list of challenges as the single largest obstacle to business growth (14%). This was very closely followed by ‘input costs’ (13%), ‘difficulties accessing finance’ (11%), ‘difficulties hiring staff’ (9%), ‘government bureaucracy’ (8%), ‘premises costs’ (7%) and ‘regulations’ (7%).

However, founders are optimistic for the year ahead, with most (60%) expecting revenues to grow, over half (57%) predicting consumer demand to rise, nearly half (45%) hopeful that staff counts will increase, and almost half (49%) actively targeting growth, as opposed to keeping things stable.

This general feeling of confidence is best explained by many founders expecting the key drivers of business success to improve over the next year. Perhaps it’s the inherent optimism possessed by many entrepreneurs, yet on every variable polled, the net expectation was that things would get better.

Warren Mead, Chief Executive Officer of Sumer, said, “Our study makes for some uncomfortable reading, especially if you consider the knock-on effect of even one small business going under in a community.

“These organisations are embedded within the fabric of their local areas, providing much-needed employment, a sense of pride in place as well as a route for social mobility. I was staggered by the large proportion of respondents who flagged they were seriously considering shutting up shop.

“However, is it any wonder, given the wave of economic, political and social uncertainty they have had to deal with? This report should provide a catalyst to us all, from grassroots upwards to play our part to help smaller businesses to thrive.”

Playing favourites

Refreshingly, regional pride comes through loud and clear, as nine out of ten bosses (89%) think that a company can achieve its full potential, without being based in London.

However, by a ratio of more than six to one, entrepreneurs agree that economic inequality between the regions of the UK is still a problem, with many regions plagued by under-investment, skills shortages, and economic stagnation. Greater London is seen by many to receive preferential treatment, and there is a strong sense that the Government must help reduce economic disparity.

Advice to policymakers

The findings highlight that Government must deliver concrete policy reforms for meaningful and sustained change to occur, to better support UK SMEs and entrepreneurs.

Policy recommendations include:

• Ensuring business taxes are competitive, by not raising the headline rate of Corporation Tax any further
• Guaranteeing reform of Capital Gains Tax does not discourage entrepreneurial activity
• Reforming Business Rates to be fairer and incentivise more productive land use
• Invest in infrastructure to keep Britain moving – by streamlining the planning process, allowing developers to capture more of the value uplift they create
• Exploring alternative financing methods for construction
• Increase the supply of business premises – by liberalising regulations preventing development
• Unleash the next phase of mayoral devolution – by granting ‘London-style’ powers to metro mayors
• Examining what fiscal powers could be devolved from Whitehall

Eamonn Ives, Research Director at The Entrepreneurs Network said, “If the new Government is to make good on its promise to restore meaningful growth to every corner of the nation, it cannot ignore the role the private sector plays in delivering jobs and opportunities.

“Entrepreneurs don’t tend to wait around for a hand up, but that’s not to say there aren’t things the Government can do to make their lives easier – from ensuring taxes remain competitive, to strengthening infrastructure, to keeping Britain open to the world.

“Efforts to rebalance economic growth have a patchy track record, but by forensically examining what works, there’s no reason why businesses in every region of the country can be united in growing and fulfilling their potential.”