It’s undeniable that times are hard for small business owners right now, with energy cost increases, national insurance rises, ongoing issues with supply chains and struggles to fill vacant job vacancies.
Today the Chancellor announced his 2021 Budget, but what does this mean for small businesses?
At the beginning of the year, over a third (37%) of businesses stated they were concerned about how Brexit will affect their imports and exports according to our business trends report and the HGV driver crisis has confirmed their concerns as thousands of small businesses have been hit with supply chain delays with many waiting for stock for months on end and losing out on finances.
To help with the issues with the supply chains, the government HGV levy will be extended for a further year until 2023 and the Vehicle Excise Duty for heavy goods vehicles will be frozen in hope to meet the demand quicker and get the supply chains moving to pre-pandemic levels.
While the announcement of the rise of the minimum wage is welcomed for workers, for small businesses owners this is another cost challenge to running their business.
On top of the increase in energy bills, increase in petrol costs, rise in inflation and the confirmed national insurance increase, this 6.6% increase would require an additional £1,000 per year for minimum wage full time workers. Whilst there is some welcome news in the budget for hospitality, the overall business environment will remain challenging for those small, independent businesses in the UK.
One in four (28%) small business owners think the government should offer them extra support to help cover the minimum wage increase, according to our business trends report. This extra support could help businesses continue to contribute to the struggling economy.
The announcement of 50% discount on rates for the retail, hospitality and leisure businesses up to £110,000 for one year will be hugely welcomed by these industries as they continue to claw back their recovery from the pandemic following months of hardship due to national lockdowns.
British high streets rely heavily on small businesses and our high street index report revealed how suburban high streets are thriving following on from consumer spending habits changing to shopping local and communities supporting small businesses since the pandemic. It’s only right the government give these businesses the chance to fully recover from the pandemic and help high streets to continue to bounce back.
The announcement of the £150million pot of funding to make angel investors available to businesses outside of London and the South East is a breakthrough for small businesses.
Our high street index report revealed how more suburban high streets continued to thrive following on from the lifting of lockdown while London city high streets continued to struggle, this suggests that the opportunity is there for small businesses outside of London and this investment could really help to revive high streets.
Investment in new businesses shouldn’t be dependent on where the business is based. High streets up and down the country rely on small businesses so this kind of investment will not only allow start-ups to grow to levels they wouldn’t have been able to without it but it could also boost the economy for town centres up and down the country.”
The announcement of the new investment relief will be welcomed by small businesses, allowing owners to make property investments and pay no extra business rates for 12 months. This will allow businesses to invest in their buildings whether it’s new security systems or creating a greener work environment.
According to our business trends report, one third (33%) of SME owners said they have noticed their customers caring more about sustainability, this new investment will give businesses the opportunity to invest in green infrastructures such as solar panels which not only aligns with values of consumers, but will help reduce running costs and build greener businesses.
The hospitality sector has been the hardest hit sector throughout the pandemic, with restrictions only finally being lifted on 19th July. Following the announcement of the business rate relief at £1.9bn, the government also announced an alcohol tax cut worth up to £3billIon and cancelled all planned duty increases on alcohol.
One in two hospitality businesses had to use the furlough scheme according to our business trends report so these cuts will be welcomed by the hospitality sector as they need as much financial support as they can to bounce back to pre-pandemic business and keep their prices appealing to customers.
The new draught relief which will benefit community pubs where 70% of their custom is from draught will see 5% tax cuts on drinks served from draughts. This will be welcomed by local pubs as lower prices will be attractive to customers.
And finally, another win within the budget for small businesses is the small producer relief which is designed to benefit small cider producers and those making alcoholic drinks of under 8.5%.
While there are areas within the budget that will help ease the strain on business owners, the fact that inflation is expected to rise to a staggering 4% over the next year, the cost of living will continue to rise and the national insurance rate is increasing, it’s fair to say it is going to be a tight financial year for many SME’s.