Will the Lord Young report help micro businesses to grow?
Lord Young, enterprise adviser to the government, has recently published the second phase of his report into small business. This time he looks at Growing Your Business.
In summary, he’s recommending increased support to help small businesses grow:
- a “Supporting Small Business Charter” to encourage business schools to target the area of SME growth
- a £30 million “Growth Vouchers” programme, aimed at helping small and micro businesses to get professional help
- an increased £30 million funding for the Start-Up Loans scheme, with a recommendation that the current upper age limit of 30 on this scheme be removed
- more funding for SMEs in their third year looking for money to grow, and an extra £100 million funding to be made available through the Business Finance Partnership, which promotes alternative finance sources such as crowdfunding
I’d like to pick up on three points in the report.
1. Growth through simplification?
Lord Young points out, “Within the micro business population itself growth has been driven predominantly by businesses without employees.”
Drawing attention to the perceived complexity of the recruitment process - and to the fear many business owners have of recruiting the “wrong” employee, costing them and their business a lot of time and money - he says: “The actual employment process should be simplified. We need to ensure that employers can complete the actions required of them more seamlessly.”
He’s absolutely right. To me, the key to business growth is simplification of the myriad legislative processes involved. Employment, HR, tax, all are hopelessly complicated, and contribute to why many businesses choose to stay small - so making these simpler would be a great boost to the small business sector.
However, I would also hope that these changes are not rushed and that all of the implications are properly considered - to ensure that by simplifying one aspect of running a small business they don’t inadvertently make things more difficult elsewhere!
2. Growth Vouchers: what will the model be?
The report makes a proposal for a £30 million Growth Voucher scheme, but also mentions that the model for this has not been finalised. So it's not yet clear if these vouchers would actually allow small business owners to redeem their value on professional services such as accounting.
I wholeheartedly agree that small business owners should be encouraged to seek professional help and guidance, given the complexity of the legal framework in which they are operating. A voucher scheme would help with this, however, the quality of the providers would need to be vetted.
I am also concerned that Lord Young wants private firms to set up websites providing “advice and inspiration to help people start and develop their businesses.” My concern here is that this could lead to an enormous and disjointed collection of websites, with business owners confused as to which one to choose. I would have preferred a centrally managed and operated service with funded advice from vetted professionals.
3. Start-Up Loans: no age limit is positive
I agree with Lord Young’s recommendation that the Start-Up Loans scheme should be open to anyone of any age who wishes to start a business. Many people over the current age limit of 30 have ambitions to start a business but do not have the money to spare. They may have better-paid jobs than their younger counterparts but are also more likely to have mortgages to pay and children to support, so they cannot simply walk away from a well-paid job
Opening the Start-Up Loans initiative to potential business owners of any age would be a very positive move.
From my perspective, Lord Young’s report has a lot to commend it and I hope that the government will heed his recommendations and act upon them.
- Introducing Insights!
- Time for a new tax year! What’s changing for small businesses?
- Return of the hack!
- Get ready for the end of the 2017/18 tax year
- Wave hello to Tide