By Simon Palmer, pictured, Partner at Yorkshire accountancy firm Garbutt + Elliott
Despite the UK enduring a period of political change, with the results of the Brexit referendum and the impact of the general election yet to play out, the business environment is still a positive one. This is particularly the case for start-ups and organisations under three years old as there are significant opportunities available for growth. Here are the reasons why I think now is the best time to start and grow a business.
The availability of funding
In the past, new and rapidly growing businesses faced a significant challenge when it came to accessing finance through traditional avenues, with banks preferring to lend to well-established companies that could demonstrate good profitability. For start-ups and organisations in their first three years of trading, this can be a difficult hurdle to overcome as SMEs reinvest profits to help continue their growth. However, the funding landscape is changing and there are a wide range of initiatives and schemes that allow businesses to access the funding required to achieve their goals.
Of particular interest to small businesses are the government incentives in operation across the UK, with local authorities operating grants, loans and business support initiatives to encourage the entrepreneurial spirit. There are currently 48 Local Enterprise Partnerships (LEPs) in existence across England, with similar schemes in operation across the rest of the UK, all of which are designed to support businesses in their local area. In Yorkshire alone, there is a significant amount of additional regional funding available for small businesses looking to establish themselves, as well as companies aiming to expand in their first three years.
In the Leeds City Region the Business Growth Fund offers 20% grant funding to Capex and fit out expenditure whilst the LEP will provide 25% top up loans for similar capital expenditure. Leeds City Region has also launched the Ad:Venture fund for businesses in their first three years of operation. Grants from £500 to £25,000 are available and businesses can also access a wide range of support systems, including workshops around human resources, strategy, cashflow forecasting, branding, marketing, innovation and research and development, which all play a significant role in the sustainable growth of a new business.
In the Leeds City Region and North Yorkshire the popular Digital Enterprise Support vouchers enabling you to obtain grants of up to £5,000 for IT, hardware, software, digital connectivity and websites will no doubt sell out soon so register quickly for this one. Further afield, SuperFast South Yorkshire offers £12,500 digital upgrade voucher schemes for small businesses looking to get connected. Companies in Doncaster, Barnsley, Sheffield and Rotherham can cover connection costs between £1,000 and £5,000.
If you are looking for working capital loans the Northern Powerhouse Investment Fund provides micro finance of between £25,000 and £100,000, debt finance of up to £750,000 for high growth companies and up to £2m equity funding.
With so many grants, loans and funds available at the moment, businesses are almost spoiled for choice when it comes to securing the funding required to set up and grow their company. These initiatives have been developed to encourage business growth and job creation and it is great to see so many people taking advantage of the current conditions.
As well as significant funding and grant options, the government has developed a range of incentives to encourage UK-based small businesses to innovate and invest in the research and development of new technologies, techniques and processes.
This scheme can offer an additional 26 per cent tax reduction for profitable SMEs, for every pound spent on research and development (R+D) activities. For loss-making companies, the tax credits also return 33.35 per cent, for staff costs and developing new or improved products, processes, services or systems. You’d be surprised how wide the R+D definition now extends.
In a nutshell, help is at hand to provide support to small businesses looking to invest in the development of the latest technologies that could set them apart from the competition. Undertaking a programme of research and development can be expensive, particularly for companies that are still growing and focusing their investment on new premises, product lines and marketing activity.
However, access to research and development tax incentives can offset some of this investment and enable businesses to create something truly innovative and unique, while reclaiming some of the costs.
Cloud accounting advances
Along with increased funding availability and tax incentives for investment in new technologies, things are easier than ever before for new businesses when it comes to handling money. The development of cloud accounting services from small businesses, such as Xero, has revolutionised the way some companies handle their invoices, payroll, expenses and other factors that impact cashflow.
When looking at all the elements available for new businesses and those aiming to grow in their first three years, there are so many incentives and ways of accessing assistance that the current conditions have to be some of the best circumstances to start and grow a new business.
If you would like a free guide to grant funding in the Leeds City Region and North Yorkshire you can contact Simon Palmer at SPalmer@garbutt-elliott.co.uk.