I only tend to blog when I am passionate about something.
This ‘something,’ I think ALL small business owners can relate to. (Remember I am one too!)
Listening to the news on the radio and reading various articles it is certainly crystal clear that small business has got to be super careful moving forward.
Firstly the changes to various employment laws in giving new employees particular rights from day 1 of employment. I have certainly been through the mill a time or two with employees that were amazing at interview but when it came to doing the job, it was very clear (to both of us) that the role was not for them. My point being in that process of hiring, searching, using employment agencies where the minimum cost I have ever paid was £1000 to find out the agent had never even met the candidate in person. The cost of employing a staff member is a lot in terms of finances, PAYE, NI and holiday pay, but also in terms of logistics, holidays, settling in with other people, the list goes on and on. The upcoming changes the Government has put in place sound pretty worrying along with and ever increasing minimum wage which pushes costs ever higher. I have come across a number of small business owners who are really wondering if it is worth continuing and weighing their options carefully.
Some words of advice from an H R Professional – Katherine at Keeping H R Simple
“Not to panic – these changes that are proposed are subject to consultation and aren’t likely to take effect for at least another year, if not two;
Businesses have time to prepare for them – what they need to be doing is seeking support to consider the available options;
Practical advice would be:
Consider the current workforce and establish if there are any gaps that might need to be filled;
Review job descriptions and make sure that they’re detailed and up to date;
Identify if any of the gaps could be filled by outsourcing rather than employing OR by changing someone else’s job role instead of bringing in someone new;
Really focusing on looking after the current team and making sure that they are motivated and feel valued in order to reduce potential staff turnover.”
Thoughts from Accountant Simon Laskey
“I am already seeing reactions to the Budget changes combining the increase in NMW; increase in Employers NIC for many; increased employee rights; increased Rates and a heavier tax burden on solo Director companies (as they cannot claim the Employment Allowance and their salaries will now have to be reduced or pay Employers NIC as well). Overall, a tremendous amount of tax pressure will now be on the self employed particularly where they recruit.
What will happen? Business owners will need to consider whether full time jobs can be made part time, if someone leaves do they replace them (adding pressure to the remaining work force); do they employ at all or now use consultants, can payrises and Christmas parties still go ahead etc. Ultimately, this could well impact unemployment statistics.
It feels very short sighted to give the tax burden to the self employed who already have the risk associated with being in business. I’ve already had one call this morning (the day after the Budget) from a client who has decided to shut down before the changes come in.
It will be very interesting to see if all of the above results in a lack of growth and investment.”
Thoughts from Insolvency Practitioner, Chris McKay – McKay Business Solutions.
“Increased costs for businesses will have to either be absorbed, usually at a cost to the business owner or passed onto to customers where possible which will ultimately increase inflation. It has been clear that businesses have been struggling to cope with increased costs before the latest round of increases. Company insolvency numbers have increased significantly since 2020 through a combination of rising costs, higher debt repayments due mainly to the BBL scheme and business not returning to pre pandemic levels. For businesses already struggling, the increases in labour costs are not helpful and may lead them to consider if they can continue. Before making any decisions though its important to understand your options and to look at some forecasts.”
When Answer-it began trading in 2007 we were faced with tough times and a recession. Perhaps I was naive in starting the business at this time. I think if I had known I may not have started the business at all! However it became pretty clear on signing up clients that our service was invaluable to those who did not want the burden of the HR ‘stuff’ or the costs associated with employing a staff member.
What they did want was to present a professional front to their business, at an affordable price. There are lots of options for our clients, in how much we do for them. For some clients we take a simple phone message, for others we book appointments, for some we take orders. Some clients even ask us to help with some of their admin tasks. We are considered as an integral part of their business. I have lost count of the times I have read an Email from a client that says ‘Without you and your team, I would not be able to run my business.’ I find it even more reassuring we are getting things right when this is a response to an invoice.
For some clients we are an interim relief, perhaps a team member has take maternity leave, or an extended break away from the business for other reasons. The team here step into that breach to fill the void. In other instances start up companies use the service to enable their growth while they are able to sustain the cost of employment, we more than likely slip into the background once this happens and ‘rescue’ overflow. We CAN help here at Answer-it, if you are in any doubt ask the 3 clients who have shared their thoughts and advice above.