Should last winter’s severe weather return, 84 per cent of businesses said they would be adversely affected – according to recent research by insolvency trade body, R3.

Nearly two thirds (61 per cent) of businesses said that staff would be unable to attend work and nearly half (48 per cent) said they would experience reduced profits.

Frances Coulson, R3 President, comments:

“These are worrying findings. Last year the weather caught us all off guard and the detrimental economic impact was widely reported. It seems as though a few days of icy weather this year could easily snowball into a financial disaster, especially for struggling businesses. They should be planning for the worst to avoid taking a real hit if trading suffers.”

The survey found that six per cent of business thought that adverse weather conditions could tip them into insolvency. In the retail and distribution sector, the findings were considerably higher than the national average, with 11 per cent of businesses worrying that severe winter weather could tip them into insolvency.

Frances Coulson continued: “It comes as no surprise that the retail sector is most concerned. Earlier in the year, R3′s Business Distress Index showed that retail businesses are more likely than any other to be concerned about their debt levels (41 per cent). The research also found that 58 per cent of retailers were experiencing a decrease in profit which was 24 per cent higher than the cross sector average.

“Although the last retail figures showed sales were up, people are likely to curb their spending again after Christmas. Retailers also have quarter day to contend with at the end of December, which will mean many will be paying landlords a hefty lump sum. If a business is already struggling and does not think it will withstand the pressures of severe winter weather, it should seek the advice of a professional to ensure it has the best chance of survival.”

The Federation of Small Businesses (FSB) and All Party Parliamentary Small Business Group (APPSBG) are launching an inquiry into entrepreneurship today, as new figures show that almost a third of small businesses at start-up stage have difficulty finding suitably skilled staff, ahead of employment statistics next week which are set to show another rise in unemployment.

New statistics into the barriers small businesses face when starting-up show that 27 per cent of small businesses found it difficult to find suitably skilled staff. With unemployment at 2.62 million and youth unemployment more than a million and set to rise next week, this is a worrying figure.

Respondents to the FSB ‘Voice of Small Business’ Survey Panel also said that they found regulation requirements onerous (47 per cent) and had difficulty securing finance (34 per cent) at start-up.

These figures come as the FSB and APPSBG are launching an inquiry with Iain Duncan Smith, Secretary of State for Work and Pensions, into entrepreneurship to see how these barriers can be removed. With 95 per cent of private sector businesses employing less than 20 members of staff, the inquiry will look at how these firms can be encouraged to take on staff and how budding entrepreneurs can be supported in setting up their own business against a backdrop of uncertain economic times.

The Government has introduced a raft of new measures aimed at supporting entrepreneurs, however, the FSB’s ‘Voice of Small Business’ Index shows that employment intentions and business confidence has dropped. For small businesses looking to grow, there are still fundamental problems with hiring skilled staff, regulations and access to finance.

The FSB is calling on the Government to:

• Reinstate the graduate internship scheme to give graduates the opportunity to acquire the skills they need for starting and running a business
• Prioritise enterprise education by putting it in the statutory curriculum
• Take on the Independent Commission on Banking’s recommendations to create more competition in the banking sector
• Extending Work Trials to the first day someone signs on to Jobseekers Allowance to help create 46,000 more jobs
• Reduce the flow of regulation and tackle the stock of existing regulations

John Walker, national chairman, Federation of Small Businesses, said:

“Challenges posed to entrepreneurs will always vary, but we know from our members that common issues at start-up stage include, finding suitably skilled staff, complex regulation and access to finance. And coming up against these at the very beginning of their entrepreneurial career can prevent them from growing. With the private sector being relied on to drive economic recovery, these barriers need to be removed – budding entrepreneurs should be supported in setting-up in business, and existing businesses should be encouraged to innovate, take on staff and grow. This inquiry into entrepreneurship will cover a raft of issues and working with the Government, we hope that these issues can be put to bed once and for all.”

Brian Binley MP, chairman of the Small Business APPG, said:

“We hear from small businesses time-and-time again that they are finding it difficult to get staff with the skills necessary to run their businesses. Small and medium sized businesses and entrepreneurs are expected to be driving economic growth in support of Britain’s recovery but they are finding it difficult to get the right people to help them in that task. I am hopeful that this inquiry will go some way to addressing the challenges of rising youth unemployment and the skills crisis we have thanks to the legacy left by the previous government.

“I know that John Hayes, the Skills Minister, is working hard to bridge the skills gap which is especially important to the precision engineering companies in my own constituency of Northampton. However, John Hayes’s work is being hampered by the poor performance in our primary and secondary schools, especially with regard to literacy and numeracy and whilst Michael Gove, the Education Secretary, is pulling out all the stops there is still a lot to do. Our review will be looking at ways of improving those basic skills as well as the more advanced skills required to meet industry’s needs.”

 

Sage UK and Mercer have launched of Sage Employee Benefits, a new service designed to make it easier and more affordable for SMEs to introduce staff benefits packages.

Sage Employee Benefits offers small business owners the opportunity to provide benefits packages including medical, life insurance, income protection, pensions, travel and dental insurance. Provided via Mercer’s mercer-elect solution, the service harnesses Mercer’s strong relationships within the insured benefits market developed from its work with multi-nationals. The proposition is designed to give SMEs – looking to provide cover for up to 100 employees – access to competitive rates and leading benefits normally only available to larger organisations.

“Whilst most employers understand the significance of offering a benefits package, SMEs still have concerns regarding costs and the time required for administration. That’s why Mercer and Sage launched Sage Employee Benefits with mercer-elect. Designed with small business owners in mind from day one, it makes bespoke benefit packages simple to roll out and easy to manage at an affordable price,” explained Matthew Forrest, head of services, Small Business Division, Sage UK.

The Sage Employee Benefits solution simplifies the administration associated with running a benefits scheme by providing a secure online portal, which both employers and employees can access via their PC anytime they need information. The ‘anytime access’ helps free up entrepreneurs’ time allowing them to spend more time focusing on running their business.

Users of the service also benefit from access to Mercer’s teams of specialist advisors who provide expert guidance and insight on the latest legislation and market developments. This is all aimed at ensuring that SMEs are getting the most value from their packages.

“To think that employee benefits packages are the exclusive preserve of big business is simply wrong. When the changes brought about by the Pensions Act 2008 start to come into effect from next year, employer provision and contribution to pensions will switch from ‘nice-to–have’ to legal necessity for all organisations over the next few years,” commented Simon Griffiths, principal at Mercer. “At a time when pay rises, if they occur at all, are below the rate of inflation, employees are placing great value on the other benefits that their employers provide. We’re very pleased to be working with Sage and making the type of benefit that multinational employees enjoy as standard, available to the small business community.

 

Almost two-thirds (63 per cent) of small, family-run businesses would not survive the loss of a key member of staff due to ill health or death, according to new research by Scottish Widows.

The findings show that more needs to be done to educate small businesses about the risk of losing key staff members, said Iain McGowan, head of savings and protection at Scottish Widows.

The Scottish Widows Business Protection Report, which details research carried out with over 500 UK business decision makers, shows that the majority of businesses are still reluctant to protect themselves from the unexpected loss of a business owner or key member of staff.

By their nature smaller businesses are more exposed to certain risks and in particular the loss of a key player. Despite this, 60 per cent say they do not think they need a protection policy in place. And the research also shows that only six per cent of UK businesses have financial protection to cover the death of key person while only four per cent have protection for a key person suffering a critical illness.

“Small businesses are the lifeblood of the UK economy making up 99 per cent of the private sector. Even in these challenging economic times today’s entrepreneurs must be prepared for the financial impact that a critical illness or death of a key employee could have on their business,” said McGowan.

“Businesses need to consider the key risks they face to all aspects of their operation. This includes planning for the very real risks their business could face from death, critical illness, or long term incapacity of a key employee or business owner. While small businesses receive assistance and advice when starting up, they also need help in taking a long term financial view of their business and planning for risks accordingly.

“This responsibility for further education and understanding sits with the industry, Government and businesses themselves.”

John Walker, chairman, Federation of Small Businesses said: “The loss, even temporarily, of a key staff member or other interruption is always going to hit the smallest firms the hardest. A single member of staff could be half your workforce. It is therefore vital that small businesses get their contingency plans in place now, not when trouble strikes.”

 

New figures from the Federation of Small Businesses (FSB) show that sickness absence costs small businesses on average £1,500 per year.

Long term sickness absence does not affect the smallest of businesses frequently, but when it does it has a big impact and the costs can be high. The FSB’s ‘Voice of Small Business’ survey panel shows that on average small businesses only experience 2.4 days sickness absence per employee each year – much lower than the national average 7.7 days per employee – 25 per cent said that they experienced no sickness absence at all and 81 per cent said that they were not at all affected by long-term sickness absence.

However, in the last 12 months sickness absence cost firms on average £1,500, but for nine per cent it cost more than £5,000. So it is important that the Government does more to help with the costs of sickness absence in the smallest firms.

Currently, some small businesses can feel confused by the Percentage Threshold Scheme – the current system used to calculate how much SSP an employer can claim back. This means that many small businesses either have to spend time doing difficult calculations or they have to spend money on buying in help.

With 40 per cent of small business employers claiming that dealing with holiday entitlement and sickness absence was one of the most difficult aspects of employment law, the FSB believes that recovery needs to be simplified so micro firms can reclaim all SSP costs more easily to stop them from being hampered at such a difficult time.

The FSB is calling on the Government to introduce a small employer’s relief for all firms with an annual National Insurance Contributions bill of less than £45,000 to recover SSP. This relief would be like that used for reclaiming statutory maternity pay and would use the same calculations. As a result, it would ease the administrative burden, as well as helping businesses manage sickness absence better.

Small firms care about their staff and want to invest in their health where they can. However, Government must understand the pressures small firms are under, and that this is one pressure among many. This needs to be recognised within the soon to be published independent review into sickness absence.

It will also need to recognise that small firms are not able to cope with an increase in the burden of responsibility or an increase in regulation, but that by better supporting small businesses, they could be able to improve the way that they manage sickness absence.

The Government should look at improving the way the Fit Note is used by making it electronic and increasing the training that GPs are given on how to use it.

Small businesses also need better access to free occupational health advice either through GPs or via the national occupational health phone line to make this issue easier to manage.

John Walker, national chairman, Federation of Small Businesses, said:

“Small firms act like a tight knit family and value the contribution their staff bring to the business. And research shows that staff in smaller firms are more often committed and loyal. But sickness absence is one of the most complex pieces of employment law they have to deal with. It can also be costly with small businesses paying around £1,500 over the past 12months. The Government must provide a small employers relief for statutory sick pay in the same way they do for statutory maternity pay so those small businesses that experience a member of staff on long-term sickness absence, are not hampered and are given the support they need.”