OPINION28 April 2010

What the next government needs to do to help SMEs


This week’s UK TV election debate focuses on the economy. Guest blogger Maggie Drye (pictured), owner of Insitas, will be tuning in, hoping to hear pledges from the party leaders to support small businesses. But will they say the right things, if anything?

This week’s UK TV election debate focuses on the economy, during which the leaders of the Conservative, Labour and Liberal Democrat parties are expected to make the case for why they should run the country in the aftermath of the recession. Among the millions watching will be Maggie Drye, the founder of Insitas, a consumer research agency based in Berkshire. Prior to that she set up and ran Buckingham Research, which she sold to the EQ Group for £6.7m in 2002.

Drye is looking for solid commitments from each party to support small businesses through policy and legislation. But what sorts of pledges does she want to hear? In this guest post, Drye outlines four key issues she believes need addressing.

97% of businesses employ fewer than 20 people and small firms contribute more than 50% of UK turnover. Employers of small firms support the economy in a big way, by creating jobs and collecting and paying tax, National Insurance Contributions, VAT and other dues to support public services. But running a small business today is more expensive, complex and stressful than it’s ever been.

Below are four things that would help small firms make a bigger and better contribution to the UK economy.

None of them will place a financial burden on the government.

  1. I am sick of spending ridiculous amounts of time chasing large organisations to pay for services that have been delivered to a high standard and on time. We deliver on time – we should be paid on time – not have to wait 60 days and longer. Payment delays have a crippling effect on small firms – 4,000 went out of business in 2008 due to late payments. Large businesses must pay suppliers within 30 days or face automatic credit card-level interest penalties if they fail to do so.
  2. The massive legislation that exists to protect employees from unscrupulous employers is all very well (though I don’t believe the vast majority of employers are baddies), but what about the employer? Why do I now feel it necessary to consult an expensive lawyer frequently to check employment rules? Why does the dreaded word “tribunal” creep into conversation so often nowadays? Legislation must be balanced to protect the small business employer as well as the employee.
  3. The public sector spends huge amounts of money on research (far too much in some cases, but that’s another issue). But the procurement process is a no-go for small firms. Make public sector procurement more accessible to small firms and, in return, get more access to innovation, talent and real dedication. (For more on that, see here – Ed.)
  4. Banks should waive all account charges to new businesses for 2 years without penalty (e.g. reducing or eliminating interest payable on money held on account). Banks still make stacks of money from loans, overdrafts and bank account funds and this would be a fantastic way to support small firms and, ultimately, the recovery of the economy.

Are you a small business owner? Do you agree with Drye, or are there other critical issues that need addressing? Have your say in the comments below.