BUSINESS REVIEWSpotlight on issues affecting business

REPUTATION MATTERS

SME RELIANCE ON KEY PERSONNEL

BUSINESS GLOOMY ON ECONOMY

BREXIT PREPARATIONS INTENSIFY

JAVID DECLARES END OF AUSTERITY

OTHER NEWS

SEPTEMBER 2019

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BUSINESS REVIEW

REPUTATION MATTERS The latest business reputation survey conducted by the Confederation of British Industry (CBI) in collaboration with Porter Novelli and Opinium, once again highlights the significance attached to company reputation.

According to the data, more than three quarters of people want to work for businesses with a good reputation, while a similar proportion choose which firms to interact with based on their reputation. In addition, almost eight out of ten respondents admitted to being less likely to buy the products or services of a company with a bad reputation.

Encouragingly, the research reported an overall sense of improvement in this area with six out of ten people saying that business reputation is good, a four percentage-point increase on last year’s findings. The survey did, however, point to an opportunity for firms to increase their community efforts, with just two in five respondents believing companies are working to improve people’s lives in their local areas.

Commenting on the findings, Eleanor Turner, Director of Corporate Reputation & Purpose at Porter Novelli said: “It’s more important than ever for business to recognise the link between purpose and reputation, trust and customer loyalty. Business leaders therefore need to ensure they not only find their purpose, but also truly live it.”

SME RELIANCE ON KEY PERSONNELA new study has found that a significant proportion of small firms are completely reliant on the health and wellbeing of ‘key’ figures within their businesses.

The survey of more than 700 small firms across a range of sectors was undertaken by Legal & General. It suggests that over a quarter of SMEs would face immediate closure if a key person died or became seriously ill, while a similar proportion would cease trading within one year.

A key person is defined as someone whose illness or death would directly cause financial issues for a firm and, interestingly, almost two-thirds of SMEs said they had more than one key person within their business. However, although firms seemed to be acutely aware of the potential impact associated with losing a key employee, seven out of ten said they had either never considered or did not understand the need for business protection.

The research implies that up to three million SMEs in the UK could be at risk of closing within a year of losing a key person. And this has prompted Legal & General to warn of the ‘wider economic impact’ that could be caused by businesses not arranging key person insurance.

BUSINESS GLOOMY ON ECONOMY According to a recent survey, UK boardrooms remain relatively pessimistic about the country’s economic prospects, although Brexit-related fears do appear to have lessened.

These key findings were revealed in the latest biannual FT-ICSA Boardroom Bellwether survey which canvasses the opinions of FTSE-350 board members. In relation to economic prospects, the research found that 69% of board members believe the UK economy will decline in the coming year, while just 7% foresee an improvement.

Although this vividly demonstrates a lack of boardroom confidence in the economy, the figures were actually slightly better than the winter 2018 survey when just 2% predicted growth and 81% forecast a decline. Similarly, the research found that, while many board members still view Brexit as a principal risk, fears surrounding the UK’s impending EU departure do appear to have waned.

For instance, although only 3% of respondents said they believe leaving the EU will be ‘positive’, the proportion describing it as ‘damaging’ was 59% – significantly below the 73% figure recorded at the end of 2018. In addition, the proportion of respondents predicting that Brexit will result in ‘no change’ for their business rose to 38%, from 28% in the previous survey.

BUSINESS REVIEW

SEPTEMBER 2019

SME TELECOM SPENDING SOARSA poll of small business owners and self-employed individuals undertaken by Consumer Intelligence suggests the average SME business spent £2,052 on telecommunications services last year. This represents an increase of around 40% from figures published by Ofcom in 2016, with the rise driven by a need for SMEs to keep pace with emerging digital technology, such as the cloud, the roll-out of 5G and advances in fibre optic ethernet.

BRC URGES BUSINESS RATES FIXOver 50 high street retailers have signed a joint letter to the Chancellor demanding the government takes action on business rates. The letter, which has been coordinated by the British Retail Consortium (BRC) and signed by CEOs of leading supermarkets, fashion chains, homeware and department stores, urges Mr Javid to address the challenges posed by business rates and ‘fix the UK’s broken business rates system’.

RISING WAGES TAKE THEIR TOLLResearch published by the Federation of Small Businesses (FSB) suggests small business owners are cutting profits and productivity-enhancing investments in order to accommodate inflation-beating pay increases as a result of April’s changes to the National Living Wage (NLW). The FSB has called on the Low Pay Commission to ‘maintain a firm level of independence’ and ensure that the NLW rate isn’t ‘dictated by arbitrary political targets’.

OTHERNEWS

QUIRKY QUOTE: “Either you run the day, or the day runs you.” — Jim Rohn

BREXIT PREPARATIONS INTENSIFYThe government has unveiled a £10 million grant scheme and launched its biggest ever advertising campaign in order to ensure UK businesses are ready for Brexit.

On 29 August, Business Secretary Andrea Leadsom announced details of a Business Readiness Fund designed to provide financial support to trade associations and other business organisations helping firms prepare for Brexit. The grants can be used to support events, training and the production of advice packs that are designed to assist businesses with Brexit preparations.

Applications for grants from the £10 million fund must be made by 30 September, with activities needing to be completed before 31 October in order to ensure they are focused on Brexit preparations and businesses being prepared for Brexit day. The government has also stipulated that all activities funded by the grants must be open to both an organisation’s members and non-members in order to ensure firms of all sizes can benefit.

In addition, the government has launched a £100 million advertising campaign which aims to ensure businesses understand what they need to do in order to ‘Get ready for Brexit’. An online tool has also been released which allows businesses to check what specific things are required to be Brexit-ready.

JAVID DECLARES END OF AUSTERITYChancellor Sajid Javid delivered a one-year Spending Review on 4 September which was billed as an effort to provide ‘financial clarity’ to government departments ahead of Brexit.

In his first major economic pronouncement since becoming Chancellor, Mr Javid declared the government has ‘turned the page on austerity’ as he unveiled plans to significantly increase spending across most government departments. In total, the Chancellor pledged an extra £13.8 billion in day-to-day spending across the 2020–21 fiscal year.

Amongst the major announcements was an additional £2 billion in Brexit preparation funding, increases in spending on health, education and defence, as well as an extra £750 million as part of plans to recruit 20,000 new police officers.

The Spending Review was delivered amid intense political turmoil and Shadow Chancellor, John McDonnell, criticised the plans as ‘grubby electioneering’.

Director of the Institute for Fiscal Studies, Paul Johnson, also added a cautionary note in his Spending Review comments: “We of course live in a time of extreme economic uncertainty and I think the big risk in saying that austerity is over is that the economy starts to do significantly worse, which it might if we have a no-deal Brexit.”

BUSINESS REVIEW SEPTEMBER 2019

Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for information purposes only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on individual circumstances. No part of this document may be reproduced in any manner without prior permission.

ALBA SEO, 2019

19 September• PAYE, Student loan and CIS

deductions are due for the month to 5 September 2019

30 September• End of CT61 quarterly period

SEPSEP

19

30

Essential Tax Dates

Some key points from the Spending Review 2019

Brexit• £2bn for Brexit delivery• More support for business readiness and to prepare Britain’s ports for a

no-deal Brexit• The UK Treasury will work with the Bank of England to coordinate a fiscal

and monetary response for the UK economy

Spending• Day-to-day spending will increase by £13.8bn next year• £1.7bn will be added to capital spending• The increase in spending is the fastest accounting for inflation for 15 years

Fiscal Review• The Chancellor announced he will “review our fiscal framework to ensure it meets

the economic priorities of today, not of a decade ago”

A SURVEY OF UK BASED SMES, AIMED AT DETERMINING THEIR THOUGHTS ON DIGITAL MARKETING HAS REVEALED:

SMEs favour online

Average spend

are doing all their marketing online with only 14% using offline methods and 10%

doing a combination

for smaller businesses, with the vast majority spent on online methods

the most popular online marketing method for smaller

businesses is social media, with over 80% of respondents

using platforms (Twitter, Facebook and Instagram) to

market their businesses

are using optimisation methods, followed by Content

Marketing (52%), E-mail Marketing (47%), Social Media

Advertising (42%) Search Engine Marketing (33%)

believe online marketing is essential for the success of their business (19% disagree, 10% other)

of smaller businesses are using digital marketing

because they believe they get a good return on

their investment

Social media

Cost effective

SEO increasingly popular

Business success

Better ROI

80% 80%60%

71%

71%nearly

of SMEsof SMEs

of SMEs

on marketing ranged from when compared to traditional marketing, nearly

of SMEs chose digital marketing because it is less expensive. 38% said they saw quicker results and 38% said they were able to be more targeted. 33% said they felt they had more control over their marketing and 19% said it was easier to measure success

£500–£5,000/yr 50%

SMEs & Digital Marketing