Pictured above: Darren Holdway
Government initiatives have unequivocally failed to help small
and medium sized businesss (SMEs) and the new coalition must act
now if SMEs are to help the UK recovery.
With the emergency budget coming up in June, a partner at a
Birmingham accountancy firm has highlighted findings in a national
survey which prove that businesses aren't receiving the vital help
needed.
The survey found that owner managed businesses are disillusioned
by government initiatives and feel that the support during the
recession has been a "waste of time".
• Only 11% of business owners surveyed in the West Midlands
felt that the VAT reduction had helped their business.
• Only 11% said that information and support from BIS
(Department for Business, Innovation and Skills) had been useful to
their business with respondents adding that government grants were
impossible to access and information about them hard to find.
• Less than 1% of West Midlands' companies had taken up
Carbon Trust energy efficiency loans, compared to only 2%
nationally.
With potential changes to the tax regime looming, over half
(56%) of business owners said that an increase in Income Tax would
"heavily impact" their motivation to grow the business, and 55%
said the same applied to Corporation Tax.
Darren Holdway, Partner at the Birmingham office of Haines
Watts, commented: "There needs to be far more emphasis on measures
that help businesses with cash flow problems such as staggering
PAYE contributions. The VAT reduction was of little help to most
business owners but was the main tax stimulus deployed by the
Treasury."
The survey also found that SMEs were being left out in the cold
by banks - and business owners are being forced to provide personal
guarantees.
• 1 in 4 business owners surveyed said that they are
currently being asked by their bank to provide personal guarantees
to support their business.
• 28% of West Midlands' companies said that their banks had
sought to restrict access to credit during the recession. This
compares to 20% nationally and so this region has experienced an
even tougher time financially than companies elsewhere.
• Only 10% of respondents would use their bank to
'sense-check' business decisions, preferring to turn to other
business owners (53%) or their accountants (48%).
Tight bank control of credit could not come at a worse time for
owner managed businesses with 47% of West Midlands' business
surveyed confirming they had suffered cash flow problems as a
result of the recession and 54% were forced to make claims through
the courts for unpaid bills. Both these figures were above the
national averages which were 42% and 45% respectively.
In addition, the competitive environment remains fierce with
half of respondents being faced with competitors bidding for work
at below cost and 23% of West Midlands' businesses having to pitch
for work on a 'zero profit basis'.
Darren Holdway explained: "When you combine the picture of
destructive cost cutting with rising import costs due to a weak
pound, it looks like we are entering a discount economy at a time
that couldn't be worse for the sector.
"Government has a questionable history when it comes to
supporting business owners. One thing they can clearly control is
tax policy, however our survey shows that the VAT reduction - the
main tax stimulus deployed by the Treasury during the recession -
was of little help to most business owners.
"Business owners find it confusing knowing where to go for
Government help, whether that's in the form of advice or grants.
There are too many acronyms for too many schemes and very little
information comes to businesses in plain English.
"At Haines Watts we provide tax, financial and business advice
to more owner managed businesses than any other firm in the UK. We
believe that this national survey will help us to build on this
knowledge and understand even more about how businesses in
different sectors are run, how they are meeting the challenges they
face, and what makes them tick."
For more information on Haines Watts, please visit their website
here: www.hwca.com