Will your clients benefit from the small business strategy?

Accountants and bookkeepers consider whether the Backing Your Business plan will boost SMEs.

While it’s a common political soundbite to call small businesses the backbone of the British economy, it doesn’t always translate into policy. The UK Government has tried to address this in its Small Business Plan.

The past five years have proved challenging for small businesses, especially when dealing with the aftermath of the Covid-19 pandemic and ongoing global economic uncertainty. But can the government’s Backing Your Business (PDF) plan be a catalyst not only for a renewed sense of optimism in the small business community, but for genuine economic growth too?

To boost the growth and productivity of smaller firms – and ideally contribute to better economic growth than this – the Backing Your Business plan includes actions such as:

• tackling late payments
• improved access to finance
• business rate reform to support the high street
• technology training
• opening up more opportunities for small businesses to access government contracts and export markets.

Do accountants think the government’s latest strategy will provide small businesses with the support, skills and regulatory relief they need to thrive in the years ahead?

Small businesses need to be factored into every single decision

Kate Hayward, Chartered Accountant and UK MD, Xero

Small businesses have long been calling for a dedicated strategy that’s fairer and truly built around their needs. They want to know the government can and will help them, but in a way that shows they truly understand.

The government’s bold intentions to tackle late payments and improve access to funding are good starting points, as these are some of the biggest issues facing small businesses. However, we’d like to see even more ambition, with small businesses being factored into every single decision.

Small businesses are grappling with a tough economic environment. On top of that, they are trying to keep up with accelerating change, such as developments in AI technology and regulatory shifts. They deserve robust support that encompasses skills, education and community, so they can seize new opportunities and navigate change effectively.

In every town and community, small businesses are the very essence of what we cherish about the UK. They need tailored, accessible support that is relevant to them to thrive and unlock vital growth for the wider economy.

Verdict: There are some bold intentions from the government that can be built on. Small businesses deserve to be thoroughly supported.

The plan has long-term potential for businesses and communities

Craig Dyer, Managing Director, CA Dyer Accounts and Bookkeeping

Overall, Backing Your Business appears to be a positive step for UK SMEs. It directly addresses many of the longstanding challenges and concerns that business owners face daily. 

Improved access to funding, guidance and mentoring could have a positive impact in the future, which should be a great thing for small local businesses and communities. The proposed changes for hospitality and high streets are a good idea, especially given that they have found the post-Covid economy challenging.

The new Youth Entrepreneur King’s Award for Enterprise is particularly exciting. Hopefully, this will encourage more young people to become small business owners.

As with all plans and policy changes of this ilk, the major concerns will be around how accessible the schemes will be, effective implementation, and what impact it will have. It will take decades to assess the impact, but the local accounting and bookkeeping industries and communities will be there to support local businesses and their owners along the way.

Verdict: This is a positive plan overall, and accountants will be there to help businesses navigate challenges.

A clear step in the right direction

Alex King, Founder and Chartered Accountant, Generation Money

The strategy is a clear step in the right direction. Measures like the proposed crackdown on late payments, an extended Growth Guarantee Scheme, and a so-called front door for advice show a genuine willingness to respond to what SMEs have been asking for.

But, with the budget still to come, the plan doesn’t fully settle nerves and provide the longer term certainty on fiscal policy that many firms need. Many small businesses will still wait for clarity on tax, business rates, and fiscal policy from the budget before committing to major growth initiatives.

The success of Backing Your Business will depend on how it’s delivered. In the case of late-payment reforms, this could transform SME cash flow, but only if rules are enforced quickly and backed with real penalties for large firms that continue to ignore them.

Extending loan guarantees will help, but without setting a multi-year business rates path, uncertainty remains for many industries. To build real confidence, the government needs to move from pledges to practical enforcement, publish clear timetables – and give businesses certainty on costs.

Overall, the plans have a solid foundation. The challenge is execution. Money from lending and access to finance schemes must be unlocked in a timely manner, licensing and regulatory schemes must be simplified sooner, and enforcement of new laws and rules must be visible. If those pieces come together, this strategy can be a real boost, particularly those who’ve suffered through the employer’s NICs rise and increases to the minimum wage.

Verdict: The plan shows the Government is listening to SMEs, but success depends on execution.

Action on late payments is the stand-out pledge

Tom Smith MAAT, Director, Every Cloud Accounting

The pledge that stands out is trying to tackle late payments, which is a positive step as they can be a huge burden to my clients and other small businesses. You’ve delivered a service or product, often paid out associated costs – and then when you don’t receive payment. The delay can be detrimental to your business.

In reality, I think the plans to deal with late payments will be hard to implement, but it’s a step in the right direction in trying to tackle this problem.

Verdict: Tackling late payments is very welcome, but strategies may be hard to implement.

Georgia Lewis is a journalist who has worked in Australia, the Middle East and the UK. Over 30 years, Georgia has covered a diverse range of subjects and industries, including business, insurance, technology and logistics..