By Dominic Allon, pictured, Vice President and Managing Director at Intuit Europe
The appointment of the new Small Business Commissioner has felt like a long process. Applications opened in February, closed in March, but the individual won’t be announced until Autumn. In addition, the snap election will have delayed the process. However, this wait should be a positive sign that the selection panel, including Mike Cherry, National Chairman at the FSB and Margot James, Small Business Minister, is making every effort to get the right person in place.
The individual will need to have the right qualities to have credibility among small and large businesses, as well as government. They will become a trusted advisor on how legislation like Auto-enrolment and the minimum living wage will affect small businesses. Ideally, they should have worked with, or as part of, several small businesses. This will reinforce their experience and ability to understand the everyday struggles of an SME.
With this in mind, let’s look at the three main challenges that the Small Business Commissioner will need to address in the coming year:
- Late payments: Time and time again we are reminded of the late payments crisis damaging small businesses, who are owed a collective £26.3 billion. Research from the FSB shows that poor payment practices are on the rise, causing 50,000 business deaths each year. The government has recognised this is an issue and launched the Late Payment Reporting Guidance earlier this year. The aim is to help larger businesses report on how quickly they pay smaller business. With cashflow remaining one of the biggest challenges to small business growth, this will be one of the core issues the commissioner will tackle head on. There are no fines or legislation currently in place to force larger firms to pay up. They will need to have strong credibility and negotiation skills to change the UK’s late payments culture.
- Funding: In times of uncertainty, many entrepreneurs may not want to start their own business until things have settled. However, we can’t allow the current economic turmoil to harm the UK’s competitiveness. SMEs bring a combined turnover of £1.8 trillion to the UK economy and we must encourage people to follow their dream of running their own business. Key to this will be an increase in, and easier access to, different funding options. For example, there are several government funding schemes and grants aimed at SMEs, such as the Business Enterprise fund for businesses based in North East England and the Innovate2succeed – UK scheme to help with funding for innovation. In addition, some will need educating about using alternative finance methods, such as P2P lending, invoice financing and crowd funding.
- Rising costs: The rising living wage, business rates going up and compulsory Auto-enrolment are just a few examples of extra costs that SMEs must factor into their business plans and forecasting. Guidance from the Commissioner on how they should build in the investment for these will be crucial. Getting a complete overview of the finances and what’s coming in versus what’s going out will help too. Small firms will be in a much better position to plan for the additional expenses they may incur because of Auto-enrolment. Ultimately, this will allow the small business community to focus on doing what they love; running and growing their business.
Being the first in a new role means the pressure is on. The Commissioner’s background will form an important part of the credibility they have in their new role. They will need to take a hands-on approach to making the shift in culture happen across small and large firms. We cannot underestimate its importance. It will be a chance to set the strategy for supporting the UK’s small businesses and pave the way for how the UK champions SMEs for the years to come.