2011 – The year small businesses came to the UK economy’s rescue
15th January 2012
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2011... a year of doom and gloom; worries about the economy both in Britain and Europe; a time during which purse strings were well and truly tightened in the face of yet another potential recession.

And yet, it is also likely to be remembered as the year that SMEs stepped up and did their bit to aid the UK’s economic recovery, whilst many of the big brands stumbled and fell.

Glenn Leathley, owner and principal accountant of Chronicle Accountants in Buxton, charts the efforts of small businesses throughout 2011.

It was never going to be easy – SMEs had to overcome a variety of challenges, including the lack of access to credit, harsh trading conditions and a range of counterproductive legislative decisions, courtesy of the UK government. However, in the midst of some of the country’s largest household names struggling and having to close branches (Thorntons, Carpetright, Thomas Cook and HMV are just a few high street brands finding the economic climate difficult, small businesses have battled through with grace and dignity.

In fact, incorporations are on the rise – in November 2011, Companies House listed 2.8m companies on their register, which is an increase from the 2.65m the year before. In the same month, 5,711 more new companies were registered than in November 2010. At the same time, the amount of companies entering liquidation or receivership has dropped by 1,334, from 13,607 to 12,273.

Despite dire predictions of the impact the European debt crisis will have on the UK, in reality, UK’s small businesses seem to be more than ready for business – it is only the austerity and restrictions of the government and banks that are scuppering their progress.

For example:

  • Regulations – the government may have pledged to cut red tape when it comes to SMEs, but a recent study carried out by the Forum on Private Business in the middle of 2011 discovered that 84% of businesses’ spending on compliance had increased. This bureaucracy further increased in October with the Agency Workers Regulations, which could cost UK firms more than £1.5bn to police, according to the government
  • Less access to credit – it doesn’t take a genius to understand why the banks have clammed up, but many SMEs were left without vital capital as the banks were unwilling to lend

Yet, despite these difficulties, most of the UK’s small firms have managed to grow throughout 2011 – or at worst, hold steady. With the huge amount of redundancies in the public and private sector and the subsequent rise in unemployment, people have been forced to go it alone and start their own business or consultancy. Freelancers have risen by 200,000 in the last two years alone!

Plus, the government did do something right in 2011, investing heavily in the tech start-up sector, which are exactly the sort of high-growth, highly-profitable firms that can turn the economy around.

Looking to 2012

2012 may very well be a year of two halves; the first six months are likely to involve all the austerity and negativity of the last six months of 2011, whilst the latter part of the year will hopefully be bolstered – both economically and motivationally – by the Olympic Games. However, it is likely that individuals, families and businesses are all going to have to continue tightening those belts and may have to adopt new ways of buying and selling.

The most important challenge for the coming year will be to respond quickly to demand, and if we choose to cut costs, ensuring that your consumers understand that lower costs do not necessarily mean an inferior product or service.

Are you thinking of setting up your own business in 2012? Already a business owner in Buxton in need of expert financial support? Contact Chronicle Accountants today for a free consultation.


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