Wednesday, March 30, 2016

Talking small business

According to Government statistics there has been sustained growth in the total business population, an increase of 55 per cent, since the year 2000.

Looking inside this number, 90% of this increase of 1.9 million businesses is due to what they describe as 'non-employing' businesses. In total 99.9% of all the UK's 5.4 million private sector companies were classified as SMEs accounting for 60% of all private sector employees and a total turnover of £1.8 trillion! And the biggest sector of the UK businesses is "Professional, scientific and technical." Somewhere in this array of statistics is an interesting paradigm shift - 76% of these companies have just one person.

Technical Marketing Ltd [which was founded in 1999] has been well placed to observe and comment on the rapid growth of a different type of business model in the professional, scientific and technical sector of the UK economy, since 2000. Our business model is not unusual in this vibrant sector and in official jargon is a 'non-employing business'. Why do we not employ staff? Because we don't need to. Ours is essentially a knowledge business and can to a very large amount of the time operate with an Apple iBook from anywhere with a suitable Internet connection. That is not to say we don't employ people, because we do. We use businesses just like us for a range of skills such as programming, design, video, accounting, web hosting, translations etc. We provide a brief, agree a price and timescale and project manage the delivery of sub-contracted work. This has some very valuable benefits. We don't have to manage people. We don't have to own or rent premises. We don't have to deal with HR. We don't have to deal with a whole web of employment law. 

You don't hear politicians talk about this business model apart from figuring ways to impose more tax. The current Referendum campaign talks about employment, the 'Britain Stronger in Europe' web site proclaims 'being part of Europe means more jobs and opportunities.' It adds '3 million UK  jobs are linked to our trade with the EU.' Further a news release says '81% of UK small businesses want to stay in the Europe.' It continues 'More jobs, lower prices, less paperwork and its as easy to deliver to Berlin as it is to Birmingham.' The accompanying video on Facebook says 'over 200,000 UK  companies trade with EU countries.' 

Interesting. Do they mean 200,000? It's less than 4% of the 5.4 million private sector companies. Lets talk about the benefits for business advanced by the pro EU camp.

  1. More jobs. I  would suggest few small businesses consider their purpose is to create jobs. Bearing in mind that a majority of these small businesses by far are single person companies job creation is not what motivates them.
  2. Lower prices. This is based on the premise that British businesses outside the Euro tariff barrier would have to sell their products at a higher price into Europe. When the Euro currency was introduced prices in those countries ramped up fast. European regulations have tended to make goods more expensive, not cheaper. Off shore, mainly Far Eastern production, where there is far less regulation is what has lowered costs.
  3. Less paperwork. Really! What about the EC Sales returns?
  4. As easy to deliver to Berlin as Birmingham. Hmm? That's due to couriers - hardly an EU creation the rest of the world has them too. 

No comments: