The UK economy has shown steady growth and SME’s have played a really important part in its recovery.
Small and micro businesses are the life blood of this economy and employ about 60% of the country’s private sector jobs.
In recent years, unemployment figures are on a decline and there is a steady increase in the number of sole proprietors. I believe there is a direct correlation between reduced unemployment and increase in private sector jobs and the current government’s initiatives such as the Growth Accelerator, SEIS, introducing more Apprenticeships has contributed to the growth of SME’s.
Entrepreneurship and owning a business in the last few years has become more aspirational and is also popularised through TV programmes such as The Apprentice, The Business Inspector etc. There has been a rise in the sentiment of contributing to the economy through starting an enterprise.
On the other hand, there is a fear that UK ’s economy is at a threat as the Eurozone is heading towards a triple dip recession as announced by the Prime Minister in mid November. The UK’s debt remains high. Some believe that increasing taxes towards those working in an enterprise or running an enterprise is the answer.
I strongly believe that the solution lies in reducing government expenditure but not increasing tax rates or introducing new taxes.
High taxes are a burden on the spirit of entrepreneurship and curb it which ultimately results into less growth, innovation and enterprise. High taxes penalise those who are working hard and contributing to the economy through their job or business. It leaves very little incentive for people to work hard or set up their own business. If you measure what people take home at the end of the day after income tax, inheritance tax, stamp duty or in a business case after VAT, Corporation tax, etc. the amount is very low and uninspiring.
There is high risk associated to running a business especially in a country like ours where the minimum wages are relatively high in comparison to that in developing countries. There are many challenges businesses face in today but the key one is that companies are no longer competing locally but globally with a market they have no experience of. A small business would employ a receptionist who would help with the inbound calls and enquiries who would be seated in their office. Today many businesses we work with prefer hiring independent companies in Thailand and Philippines which charge one tenth of what it would cost to have that service in Britain.
A business is viable when all parties win. For sustainable growth, there needs to be a minimum of three wins. The win for the people of Britain is that a business creates more jobs for the economy, the win for the government is that more people are employed and each employee and business is contributing to it’s welfare fund and the win for the entrepreneur or the business is that hard work and service to its customers has been rewarded through a profit share which it can decide to reinvest in next year’s growth. This keeps the wheel of our economy turning.
At Entrevo, I’ve had the first hand experience of working with thousands of entrepreneurs and business owners. I am also a Growth Accelerator coach and recognise that micro businesses are seeking continual growth through cutting edge strategies, lower taxes to continue on a healthy profit margin and governments continual support and encouragement.
The chancellor announced tax cuts.
George Osborne’s £7bn tax cuts plan is essential, not optional. We need ruthless measures to reduce the counties debt, increase exports and encourage SME’s to create more jobs within the economy. We cannot tax those who are working hard and contributing to the country any more than what we already are. We have to incentivise growth and work towards a society where more people are enthusiastic about creating more economic value.
Today, the UK remains the fastest growing economy in the developed world, however we cannot ignore the threats of a triple dip recession, economic instability in the Eurozone due to the tension between Russia-Ukraine, The Middle East and low to no growth in some European countries which will have an impact to our economy.
I agree with the current governments stand that less is more and that we need to stick to plan, reduce government expenditure, promote enterprise and focus on increasing our exports whilst rewarding those who are working hard in this economy to keep Britain shining. I hope that the chancellors Autumn statement on 3rd December reflects policies that continue to help businesses.
Meanwhile, I continue on my path to help UK businesses not just grow, but thrive.