News in brief: pensions, audits, crowdfunding

News in brief
News in brief

SMEs spending too much on workplace pensions

The UK’s small and micro businesses will collectively spend hundreds of millions of pounds on workplace pension set-up costs in the next two to three years, in many cases unnecessarily.

This is according to new research by cloud-based payroll and pensions platform, Paycircle which found that, between now and 2018, an estimated 1.8million of the UK’s small and micro businesses will begin to ‘stage’ (be required to set up a workplace pension), with up to 500,000 doing so in 2016 alone according to The Pensions Regulator (TPR).

According to TPR research, small employers that have already staged have paid between £200 and £1,000 for advice on setting up a compliant workplace pension scheme, with the average cost £440.

Based on TPR findings that show around 40% of employers with 1-4 staff paid for help to set up a workplace pension, the 1.8m small and micro UK businesses yet to stage are collectively looking at a bill of £317million between now and 2018.

But smaller UK firms don’t need to pay for a workplace pension: a number of providers charge no set-up cost while some also automate the set-up and contributions process.

Tool for SMEs to manage internal audits

A new Standards internal audit tool designed by a certification body especially for SMEs has been launched to help small businesses manage their time more effectively.

Alcumus has launched the tool because, currently, many SME’s maintain their Standards internal audit function on Excel spreadsheets, in Word documents, on paper or a mixture of all three. It’s complicated; time consuming, inaccessible and not secure.

“We know that audits are not fun and not what entrepreneurs get into business for!” said Alcumus ISOQAR Director Nikki Sammé “But they are vitally important if a firm wants to compete, so we want to make it as easy as possible for them.

“60% of all UK private sector employment and nearly half of its turnover emanates from SME’s,” continued Sammé, “they have many of the same burdens as their large rivals yet often lack the in-house resources to handle internal auditing. This tool helps level the playing field by streamlining and simplifying the process to the point where it can be handled by a single employee.”

Entrepreneurs overvalue their businesses

Businesses looking for crowdfunding are giving up just 12.4% of their equity to investors on average – supporting growing concern about excessive valuations that many employ.

Growthdeck says that this overvaluation leaves both minority outside shareholders and company founders exposed to unnecessary risks:

  • An excessive valuation could make it harder for founders of an underperforming company to raise further money later as they could well be asking for investment in a company with a falling value. Investors often see a falling share price as a sign of fundamental failure – rather than just a valuation issue
  • The small collective shareholding of minority investors means they are in a weak negotiating position

Most crowdfunding platforms allow the owners of businesses seeking capital to value their businesses themselves, and Growthdeck says that entrepreneurs often tend to overvalue their own businesses.