The United Kingdom has the fifth largest economy in the world. In 2015 our total GDP was 2.849 trillion dollars. We are the ninth largest exporter in the world and the fifth largest importer.  For four consecutive years the UK has been the fastest growing economy in the G7.

How do startups contribute to this success? Here are 5 ways that startups and SMEs are important to the UK economy.

Employment and Job Creation

The greatest impact that SMEs have on the UK economy is the size and scale of the jobs they provide.

According to the Department of Business, Innovation and Skills (DBIS), in 2015 SMEs provided 15.6 million jobs, 60% of all total private sector employment.

In the next three years, it has been predicted that SMEs provide extra 250,000 new jobs.

Mark Heart, a professor at Aston University and expert in the areas of entrepreneurship, enterprise and small business asserts the employment of SMEs when saying,  ‘Small businesses, particularly micro-enterprises, have been responsible for the majority of the gross job creation in the last five years… particularly through the recession.’

Income and profits

Along with creating jobs, UK SMEs generate a significant proportion of the UKs annual turnover. According to the DBIS, UK SMEs provide a combined annual turnover of £1.8 trillion, that’s 47% of all private sector turnovers in the UK.

Share of business

SME’s also comprise the vast majority of the compositional make-up of UK business in the economy.

In 2015 there were a record 5.4 million private sector businesses, an increase of 146,000 since 2000. Of these, 99.9% are small to medium-sized enterprises, and 99.3% are small businesses.

Adding to this, 45% of SMEs plan to grow in the next 12 months and all SMEs, excluding those with 0 employees, improved growth prospects in 2013 and 2014.

Appetite for growth is strong and increasing among SMEs.

The balance of payments

The balance of payments (BOPs) is a crucial feature to the UK economy. In its simplest form, the BOPs tell us how much is being spent by consumers and firms on imported goods and services, and how successful firms have been in exporting to other countries.

An independent study, commissioned by Exact, revealed that 54% of SMEs sell products or services abroad, with the manufacturing sector very much leading that charge with 68% of them exporting.

Adding to this we may see a further rise in SME exports. Chancellor George Osborne has placed a target to get 100,000 more British businesses exporting by 2020.

Playing a leading role in women’s representation

At the end of 2015, less than 10% of executive directors at FTSE 100 companies were women. However, at the end of 2014 around 18% of all UK SMEs were female-led.

There are now almost 1.5 million women self-employed which represents an increase of around 300,000 since before the economic downturn. This is due to the fact women are increasingly starting up businesses.  Between 2008 and 2011 women accounted for an unprecedented 80% of the newly self-employed.

These female led SMEs contributed are invaluable to the UK economy and generate around £50 billion to the UK economy between 2006-2010.

We are getting nearer to the halfway point of the year – that means that this is the perfect time to assess the state of start-ups in 2016. Here are highlights of just a few of the most important news stories affecting small and medium sized enterprises (SMEs) in the UK over the past four months in our midway 2016 start-up review.

Changes to PSC Regulation

In a move to increase UK corporate transparency, as of 30 June 2016 the Government will begin requiring all businesses (no matter how small) to create a register of “people with significant control” (PSC).

This will mean that all business owners need to compile information about the people who hold more than 25% of the shares or voting rights in a company. This register will need to include a vast array of information about the people who own and/or control companies, including name, birthdate, nationality and extensive details about their interest in the company.

All UK companies (other than listed companies), as well as all LLPs (Limited Liability Partnerships) will be responsible for submitting this information annually, along with their annual statement to Companies House. All of this information will then be available and open to inspection by members of the publics. Do take note that it will be a criminal offense for a business to not comply.

A recent BCC Report finds that “Growth is Softening”

A new BCC (British Chambers of Commerce) report shows that UK economic growth seems to have continued to soften over the first quarter of 2016, and most of the key indicators used to analyse this information are either static or on the decline.

This survey is based on data submitted by over 8,500 firms in the first quarter of 2016, and shows that the services sector (the main driver of growth) fell this quarter, as did manufacturing. Domestic sales and orders have fallen to their lowest level in three years.

While many of the drivers are static, experts worry that this is part of an overall trend of decline, and that economic growth will continue to soften across the UK in 2016.

BCC chief economist David Kern is disappointed. “These results are disappointing but not surprising. This is the inevitable consequence of mounting global and domestic uncertainties, but it is nevertheless concerning that the vibrant and dominant services sector is likely to face mounting challenges in the next few years. The mediocre employment balances are a warning that we cannot afford to be complacent about the continued dynamism of our labour market.”

What will this mean for start-ups? Well, common wisdom seems to dictate that this will be bad news for small businesses, but on the contrary – start-ups can actually benefit from a declining economy, as they offer innovative solutions and bespoke problem solving.

The number of self-employed people in UK reaches new heights

A recent study has shown that self-employment and freelancing has reached new heights in the UK this year. More and more people are calling themselves “boss.”

The Not Alone report has tracked the numbers of self-employed people in the UK, and attempts to find ways in which co-ops and shared working spaces can better help freelancers achieve their goals. This report, published in conjunction with Co-operatives UK, shows that a full 15% of the UK workforce is now self-employed, totaling a massive 4.6 million people. They point out that this is the highest number in this country since this has been measured.

Many individuals who start out as freelancers or self-employed go on to become a start-up and SME owner, as they need to expand to meet demands.

The New Enterprise Allowance Has Helped Launch 80K SMEs

According to recent Department for Work and Pensions (DWP) data, more than 80,000 new businesses have been founded as a direct result of the New Enterprise Allowance since April of 2011. That averages out to approximately 1,400 a month, a result that has exceeded the project’s goals.

The New Enterprise Allowance empowers people to try something new and start their own companies. These small start-ups are often related to electrical installation, jewelry making and graphic design, and have given former jobseekers the tools and funds to create their own success stories.

According to the DWP report, the top five areas for these start-ups to occur are Liverpool, Sheffield, County Durham, Birmingham and Glasgow, and 20% were started by a person with a disability. This program has brought hope and self sufficiency to over 80, 000 people, and is set to continue indefinitely.

A new report shows that mobile shopping is on the way up 

If you are a SME owner, now is the time to be thinking about your website’s usability on smartphones and tablets. A recent report has shown that shopping for goods and services on one’s mobile has continued to increase in popularity across the UK.

According to studies produced by the Centre for Retail Research for RetailMeNot, online spending is predicted to exceed 60 billion pounds in the UK alone this year, accounting for 36% of all UK retail sales. You cannot afford to miss out on this lucrative opportunity – is your site properly optimised for mobile online shopping?

The study found that the average Brit will spend more than £60 per transaction and will spend around £1,300 this year, and that we are much more likely than our European counterparts to purchase our items while using our mobile phone (rather than a laptop or desktop computer).

If you are unsure about your site’s user friendliness when someone is browsing on a smartphone, type your webpage address into Safari (or whatever browser you use) on your phone. Does it look well proportioned? Does it re-size automatically to fit the page? Can you easily navigate between pages, and make a purchase? Try this online test to make sure.

If you answered no to any of these, you are probably losing sales. Contact your web developer as soon as possible for a solution.

 

That is a halfway start-up review of 2016 for new businesses. Although the economic climate is starting to stagnate, there are increasingly more opportunities for start-ups to take the steering wheel and drive the UK economy forward.

If you are involved in a family business, you know better than anyone about the intense mixture of pride, responsibility and family honour that goes into a simple day at the office. Of course, independent entrepreneurs also face stresses and challenges, but there is something uniquely high pressure about running a company in which your entire family (and in some cases, your heritage and ancestral history) are invested.

Studies have shown that family run businesses tend to outperform others over the long run – this can truly be a brilliant way to operate an enterprise of any size.

While an average business person has to worry about keeping their own career on track and giving their employees the best opportunities possible, a family business owner must do all of this – and keep the family’s livelihood and good name afloat. It isn’t easy – but of course, it comes with great rewards.

Business people who are involved in family owned and operated enterprises will usually have the advantage of a built in support system and a team of people who are intrinsically connected to and concerned with the success of the business in a way that average employees are not.

As you can see, the issue is far from cut and dry. If you are considering entering into your own family business, read ahead to assess a list of pros and cons that may help you to decide just how involved you would like to get with your own kith and kin.

Should you Enter into a Family Business? – Pros and Cons

PROs

• Loyalty – As mentioned above, your family (providing that they are a supportive and generally well balanced lot) will often be loyal to you in a way that hired employees can never hope to match. You will usually not have to worry about them taking meetings with competitors behind your back, spilling trade secrets to their friends and handing in two weeks notice at the busiest time of year.
• They are invested in the business and will work hard – As their own name and profits are invested in your brand and business, everyone involved in a family business is likely to give their all every single day. It can be difficult to get motivated to help a faceless corporation succeed; your family members will not have this problem, as everything they do contributes directly to their own pocketbooks and bank accounts.
• They’ll be honest (brutally so) when needed – If you own a small to medium sized enterprise and are surrounded by hired employees, management and assistants, you may not be getting the most honest opinions when you ask for them. No matter how much your team respects you, they are still your subordinates and there is an innate power dynamic built into the relationship that might prevent them from telling you how they really feel about your ideas. Your brother/sister/cousin/niece/father is far less likely to smile and nod when you suggest an idea that they regard poorly. Their critique and honest feedback can be the difference between launching an unsuccessful initiative and putting some more research and time into the strategy.
• Family is more likely to be flexible – Do you need to occasionally bring your little one or even your pup to the workplace? Need a last minute day off in order to take your child to the doctor? Feeling poorly and want an extra day at home to nurse yourself back to health? Chances are, your family members are more likely to be flexible and understanding when it comes to personal matters and childcare emergencies.
• You will save money on recruitment and limit turnover – As your family grows over the generations, you have a built-in talent pool! That’s right, recruitment can become very simple when you are selecting most candidates from within your family tree. Your nieces, nephews and children are also less likely to leave you in the lurch, which means that your turnover will be a lot lower than your competitors. In addition, many of the children in your family will grow up enmeshed in your industry, meaning that they will understand your business in a deep way that others can never parallel, and they will need far less training.

CONs

While your family members have financial and pride investments in this business, they may also feel comfortable enough to let some of their more negative traits shine through. This can lead to complacency (“I can’t lose this job – it belongs to me and my family!”) and a sense that they don’t have to work hard every day. Worst case scenario is that other hired employees see this behaviour and begin to mimic the bad example.

• Family baggage can cause conflict – Let’s face it – we all have conflict in our families. Whether someone is still holding a grudge from 1989, or the baby of the family always feels judged – there are countless points for potential clashes. The key to avoiding this is getting it all out in the open and agreeing to leave personal grievances at the door – this is business, and getting into petty skirmishes (no matter how emotional and urgent they feel) will hinder your bottom line.
• You can get stuck in a rut – By keeping most senior positions within your family, you risk getting stuck in a creative rut, as most of the people you will be working with have a similar background and point of view. Ensure that you mix things up and hire consultants and management from outside your inner circle.

 

Whether you choose to strike out on your own, start a new family business with your brothers, sisters and cousins or commit and join a long established familial firm, the differences between family run businesses and independent entrepreneurship are many. It is up to you to weigh the pros and cons and choose the option that works best for you.

 

The Business Show, an annual free exhibition for business leaders and investors, is taking place at the ExCel Centre in London on the 11^th & 12^th of May. Sponsored by Hyve Managed Hosting and E. ON Energy, The Business Show has gone from strength to strength during its 12 years of running, causing some to call it the “the country’s leading business exhibition”.

A combination of Prysm’s previous events ‘The Great British Business Show’ and ‘Business Startup’, the event is held with the primary focus of encouraging businesses to both improve and expand. This year The Business Show boasts 350 exhibitors and a host of key guest speakers, who will be providing a wealth of advice for both start-up businesses and those looking to go global. The Show welcomes investors, so there’s something for everyone!

What Can You Expect From The Business Show?

The Business Show is proud to announce yet another exciting list of speakers, including Brad Burton, the UK’s No1 motivational speaker, and Raja Saggi, the Head of Marketing at Google. Hilary Devey CBE will also be present, an award winning businesswoman and entrepreneur who revolutionised the palletised distribution industry nationwide when she launched Pall-Ex in 1996, and has appeared on popular British TV shows such as Dragon’s Den and The Secret Millionaire due to her innovation. The above names are just a few amongst the large number of speakers that will be present over the two day period; a full list is present on The Business Show website.

A number of different ‘Zones’ will be present throughout the event, including the Marketing Zone, where tips and techniques will be given in order to help businesses expand. Visitors can then find themselves receiving information and help on the latest financial technologies in the Finance Zone, where they can also pitch to a panel of multi-millionaire investors. The Business Show prides itself on aiding start-ups and SMEs and the Startup Zone will be hosting a number of successful business leaders providing their secrets; there’s a reason it’s Europe’s leading event for starting a business! Information on these Zones and the others that will be present can be found on the website.

Over 170 masterclasses will be held at The Business Show, providing businesses and investors with everything they need in order to aid development. These classes range from ‘Business Oomph’ held by representatives from KPMG to protecting your business from theft held by talkers from The Intellectual Property Office.

The Business Show Awards 2016

For the first time in The Business Show’s 12 year history, it will be hosting an awards ceremony at the ExCel Centre on the 11^th & 12^th of May, coinciding with the main event itself. A judge of panels, including the Head of Marketing at KPMG, will present the SME Website, SME Marketing and SME Finance awards 2016. Aimed specifically at SMEs, these awards will be given to businesses or individuals that have provided the best product or service in these categories to aid the growth of SMEs in a challenging economy.

Why The Business Show Is Not Something To Be Missed

The Business Show hosts a wealth of information and advice for business start-ups or for those looking to expand their business globally, as well as aiding investors in what to look for when investing. Expecting 25,000 business owners, hosting 350 exhibitors, 170 masterclasses and 250 seminars, The Business Show is a fantastic way to network your business and learn vital tips and guidance. As well as this, it’s completely free so you have nothing to lose and everything to gain!

The event is sponsored by companies such as 4Networking, London Entrepreneurs Network (LEN) and Conex, and is managed by Barclaycard, so you can be sure that this will be a must-attend event. Bianca Miller, founder of The BE Group, a company that provides services to help businesses become more profitable, productive and competitive, said about the event “it is a great networking opportunity, it’s great to find out about new businesses, opportunities and propositions, and all in all just a great event.” Make sure you do not miss out on this fantastic opportunity taking place at ExCel London (E16 1XL), a 10 minute walk from Canary Wharf, in the heart of London’s Royal Docks, on the 11^th & 12^th May 2016. Be sure to order your free tickets here.

Unless you have spent the last decade in hibernation, surely you have heard about the ongoing – and growing – trend of companies going ‘green.’ Eco-friendly firms are taking the countless small and medium sized businesses around the world and making adjustments to their business models and overall ethos in order to ensure that they are as easy on the environment as possible.

So-called green technologies and environmentally friendly business practices are taking off in popularity, and while their positive effects on the planet are laudable, they can be quite costly to enact. Read ahead to learn more about making this transition, and find out if it pays to be ‘green.’

What does ‘Going Green’ mean?

With so many business people around the world espousing the virtues of going green, it pays to try to define the term. The definitions of ‘eco-friendly’ and ‘green’ can be vague, and can change dramatically depending on who is doing the talking! ‘Green’ is a term that is normally used to refer to strategies and materials that are perceived to be better for the environment than others.

When someone states they are ‘going green,’ they often mean that they are pursuing new knowledge and planning to enact ecologically minded strategies in order to help protect the environment and to sustain the planet’s natural resources for future generations.

This is certainly a noble goal, but the resulting benefits are not always so cut and dry, as there is a bit of a problem with the term ‘green.’ Experts around the world can hardly agree on what is the best course of action when one wants to be environmentally friendly, and so there is a lot of misinformation out there.

Green actions favoured by small businesses

Here are just a few simple actions you can take to go green around the office.

• Going paperless – Choosing to do away with paper copies of documents and instead, storing everything digitally can be a great way to save paper – and save money.
• Enacting energy saving strategies – Educating your staff and enforcing energy saving tips can be a great way to lower your electric bills.
• Donating money – Putting a percentage of your profits toward environmental causes can be a great way to contribute to the planet.
• Commit to using eco-friendly supplies – It is relatively simple and inexpensive to make the switch to eco-friendly cleansers, materials and supplies of all kinds. Buy in bulk to see big savings.
• Recycle, reduce and reuse – This old slogan still holds true; don’t settle for simple recycling – ensure that you are also reusing old items (buying second hand furniture is cheaper and better for the planet) and reducing your waste as much as possible.

Pros and cons of ‘going green’

While the tips above are simple and require little spending, larger initiatives take time, money and planning. Read ahead for a comprehensive list of the pros and cons of ‘going green.’

PRO – You can substantially cut your energy costs

Depending on the measures that you elect to enact, you might immediately start to see increased energy efficiency and a substantial reduction in material waste. By cutting your energy costs you can expect to see lower electric bills, and some small companies report savings of over £7000 per year simply by going paperless. This chunk of money will certainly help any small or medium sized enterprise increase their bottom line and end their year in the black.

CON – The initial costs can be very high

Transforming your business model to include green measures (including where you source your raw materials, how you travel around the globe and how you power your machinery) can be a time consuming and costly endeavour. Even though the pay off might be worth it in the long run, can your small business handle such a large investment at this time?

PRO – You can build trust and rapport with the community

Being able to brand yourself as ‘eco-friendly’ can be a huge boon to your standing in the local community, helping you to impress your existing clients and earn new ones in the process. People like to know that the companies they support are trying to make the world a better place, and this goodwill will often translate to customer loyalty and an increase in sales.

CON – You might have to ditch longtime suppliers

As you strive to make the transition into becoming a ‘green’ firm, you may need to say goodbye to treasured relationships with longtime suppliers. If you have a supplier or use a product that is known for its poor environmental policies, it will be hard to tout yourself as ‘eco-friendly’ – and it can take years to form strong relationships with new vendors.

PRO – You can take advantage of lucrative tax breaks

By reorganising your business to be more environmentally minded, you are not only helping to save the planet, you are helping to put pennies into your coffers come tax time. The UK offers many diverse environmental tax credits and schemes for small businesses – click on the link to see if you qualify.

PRO – You will probably see an increase in profits

Reports suggest that going green can earn savvy businesses an increase in profits of up to 10% annually. This increase is based on new clientele, lowered electricity costs and the other financial benefits of reducing waste.

It ain’t easy being green

As you can see above, the decision about whether or not to go green is not cut and dry – different companies in different industries will find that they have to assess myriad factors before making this decision. If you elect to undergo this transition, you can expect upfront costs that hopefully lead to a healthier company, positive long term forecasts and, of course, a strong financial result.

From 6th April any skilled workers who have immigrated to Britain from outside of the European Union and who have been living in the country for less than 10 years must earn at least £35,000 a year to allow them to remain in the UK. Some professions on the “shortage occupation list”, such as nurses, are exempt from these rules, but unfortunately these exempted professions won’t help SMEs. We look below at just how the new immigration laws will affect British SMEs.

 How Will It Affect British SMEs?

Many businesses, particularly SMEs, employ workers from overseas rather than take a longer-term and more expensive commitment to training British workers over what could potentially be a number of years. The government has introduced this policy specifically to change this, with a Home Office spokesman saying “We need to do more to change that, which means reducing the demand for migrant labour…These reforms will ensure that businesses are able to attract the skilled migrants they need, but we also want them to get far better at recruiting and training UK workers first.”

The implications for SMEs is clear. Small businesses typically do not have as much cash flow in their early years, and this can be the make or break factor in whether or not that business survives. Choosing to employ foreign talent is not always done to find workarounds to the British system, but is often necessary for survival. While it can be argued that this new policy is both beneficial and fair to British workers, and Britain as a whole, SMEs often don’t always have the luxury of committing both time and money to training up the British workforce.

There is of course also the risk that SMEs will now have a vastly reduced pool of talent from which to recruit and hire. Again, these businesses aren’t always hiring overseas to avoid hiring British workers, sometimes it is simply that the best talent is from overseas. Just as limited outflow of cash is crucial to a SMEs survival in its first few years, so is hiring the right talent. Recruiting and training up a worker in a particular field may take years, by which time the SME may have folded due to the lack of that particular skilled worker in the business. For example, the engineering sector currently has a shortage of skilled workers, and yet the average salary for a junior engineer is only £32,000, and so it is essential that businesses look overseas for the talent to keep their businesses afloat.

By Britain closing herself off from many foreign migrants, it will also have an impact on national relations. Jeffries Briginshaw, the CEO of BritishAmerican Business, said on the matter: “American companies are deeply entrenched in the UK economy and American citizens are part of UK society, whether this is in business, schools or families. Any restriction to the Tier 2 visa scheme will have a negative impact on the way American businesses operate in the UK and how American citizens can be part of the UK.” This too may harm the plans of any SMEs looking to expand their business abroad.

Unfortunately, at least in the short term, this new policy seems like it will only hinder SMEs, with 72% of recruiters stating that it will have a detrimental effect on business. The widening skill gap in the UK, alongside the introduction of this policy, is likely to increase staff turnover, create a new level of uncertainty and stunt business growth. SMEs will now be forced to think about new recruiting and training methods, greater staff retention and have a new emphasis on cost cutting and saving. While these are always vital factors in making any business work, this new level of pressure could be too much for a SME in its early years.

 How Will It Affect British Workers?

For British workers themselves, the implications seem beneficial It will mean there will now be a greater number of jobs available, as well as more chance to proceed down routes with new training and opportunities. Where before a position would have been filled by an overseas skilled worker, British workers will now have the chance to receive the training they need for that position.

A petition has been started on the policy, seen here, and has so far attracted over 100,000 signatures, resulting in the issue being debated upon in Parliament. However, the British government remains set on the fact that the policy is fair, having given individuals several years to prepare for this eventuality, first announcing the policy in 2011.

While the policy will help British citizens and help to curb the rising immigration rate, it could have a disastrous affect on businesses, particularly SMEs. While larger organisations can afford to take the hit and take time to train up new staff, SMEs don’t have this luxury; either in terms of time or money. Hiring skilled overseas workers not only helps them save a vital amount in costs, it is also sometimes simply the best option. While the British government are adamant that they will be enforcing the policy, those that have set up the petition against it have stated that they will continue to lobby and petition against the government regardless of the result.