Autumn Statement 2016: A 500-word summary for entrepreneurs and SME business owners

Chancellor Philip Hammond has just given his first Budget address in the Autumn Statement 2016 speech, and here are the most important developments
for business leaders.

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Join us as we abseil 100ft of Princesshay Car Park this December! By raising sponsorship from your family, friends and loved ones you will not only have incredible, once in a lifetime memories, but also help us give more young people a safe place to call home this Christmas.

When? Saturday 3rd December, 2016 (Time to be allocated upon booking confirmation)

Where? Princesshay Car Park, Exeter, EX1 1EU

Cost? £20 (adult), £15 (under 18’s)

Minimum age? 14

Target Sponsorship? £100

Terms and Condition (Please read before registering)

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A 500-word summary of the short and long-term Brexit business implications

 · By Hunter Ruthven

With the ink only just starting to dry on the Electoral Commission’s official document, Real Business cuts through the noise by analysing what business leaders can expect in the coming weeks and years.

The pound has dipped drastically against the euro, and will need to bounce back

Image: Shutterstock

Short term

Currency fluctuations

Overnight, the pound fell to its lowest level since 1985. For business owners importing from overseas, they are likely to see prices rise and margins eroded. However, for businesses largely selling to international customers, a dip in the pound could lead to a decent uplift in demand.

Confidence

As we saw in the aftermath of the recession, uncertainty does nothing for confidence – and ultimately investments and consumer spending. The Leave campaign often failed to answer many of the questions asked before the referendum about what situation British business would be in if we left the European Union – and entrepreneurs up and down the country will now be keen to find out. Now that the prime minister has announced his resignation, a quick and comprehensive plan must be drawn up to deal with confidence issues.

Staff unrest

While it remains to be seen how companies will be able to recruit overseas workers, in the short term employees from other EU countries working in Britain will likely be feeling unsure as to what their future will be. With productivity an issue, any kind of unrest will be unwelcome from employers.

Property

The property boom that has been occurring in recent times could be brought to a screeching halt. Analysts believe buyers’ and sellers’ uncertainty will drive an initial slowing of the market, with the longer-term fallout determined by how severely leaving affects the economy. However, businesses could see a dip in rental bills or even a nice opportunity to buy office space.

SMEs biggest victim of HMRC tax crackdown

 · By Hunter Ruthven

New statistics revealed by UHY Hacker Young have shown that small and medium-sized businesses (SMEs) are paying “disproportionately high levels in additional taxes” and are being hit hard by HMRC’s payroll mistake focus.

Small businesses are under pressure from HMRC

Despite only being accountable for 11 per cent (£96bn) of total UK payroll, SMEs are actually paying more in additional payroll taxes and penalties (£373.4m) than larger companies (£363.9m).

SMEs, the firm concluded, are “bearing the brunt” of heightened tax investigations because of tendencies towards casual labour, flexible workforces and umbrella company operation.

Roy Maugham, tax partner at UHY Hacker Young, commented: “Much of the underpaid tax is due to genuine errors. This strongly suggests the government needs to simplify its system to help SMEs avoid mistakes.

“Those employing flexible workforces or operating as umbrella companies, for example, might find it difficult to determine which ‘box’ their labour force falls into when it comes to paying tax.”

In April, previous research carried out by UHY Hacker Young showed tax authorities collected an extra £500m from investigations into the UK’s smallest firms last year, set against a decrease of 13 per cent for larger corporations. Additionally, a survey carried out by P2P lender MarketInvoice in March found that 75 per cent of small business leaders believe that the government favours big firms over smaller ones.

Read more about tax in the UK:

SMEs, UHY Hacker Young suggested, are less likely to seek “expensive advice” on tax issues, meaning each are more likely to make mistakes when filling out employer compliance tax returns. Umbrella companies, those hiring outsourced staff on a fixed-term basis, are cheaper for SMEs but cause problems with payroll tax.

“Investigations can be extremely disruptive to SMEs – as well as expensive. While some may be actively looking to avoid paying tax, in their vast majority, SMEs will simply be tripping up on a complex tax system,” Maugham added.

In chancellor George Osborne’s Budget 2016 speech, it was announced there would be three main areas for HMRC improvement. A new seven-day service will come into force in 2017, meaning people and businesses have more of an opportunity to get through to HMRC outside of working hours.

In addition to that, an additional 800 new staff will be recruited to HMRC call centres to reduce waiting times. A dedicated phone line and online forum for new businesses and self-employed people is being created – with the intention of supporting the filling out and paying of taxes for the first time.

Read on: Paying VAT bill one day late saw publisher Trinity Mirror slapped with penalty of £70,000.

Common mistakes made by small firms – and how best to avoid them

 · By Mark Wright

I am sure you’ve heard it hundreds of times – the first year is the hardest when starting your own business – but I am going to share with you the most common mistakes new businesses make and provide advice for how you can avoid them.

“Believe it or not your firm is far more likely to fail if you don’t take the time to develop a coherent business plan”

Business plan

Writing a business plan may appear a boring and time consuming exercise, but without one how do you know what you want your business to achieve and in what given timeframe? Aside from measuring success, business plans are also vital for attracting investment and managing cash flow.

Believe it or not your firm is far more likely to fail if you don’t take the time to develop a coherent business plan. I guarantee that knowing what you want to achieve in one year, three years and five years will feed your ambition and put you on track to success.

Don’t do it alone

Starting and growing a business is both a daunting and challenging task, and as much as it will pain you to accept it you won’t be able to do everything on your own. One of the best decisions you can make from an early stage is to work with a business mentor: someone who has greater experience than you, and is able to guide through decision making and provide you with invaluable advice.

I have said this time and time again, but the real prize in winning The Apprentice is securing Lord Sugar as a business partner – his advice is ten times worth that initial investment, and Climb Online would not be this successful without his input.

So many businessmen and entrepreneurs have and rely on their business mentor, and is something every business start-up can benefit from.

Hire the right team

Growing a small firm into a seven-figure turnover business in just one year has been an extremely challenging task. One thing’s for sure, I definitely would not have been able to do this without my amazing team.

Sourcing and selecting skilled professionals is one thing, but keeping hold of them is another. Take time with your recruitment processes and think carefully about every employment decision. Just because you shared common interests with an interviewee does not mean they are the right person for the job. Once appointed, the hard work doesn’t just stop there – think about how you can keep your team interested and engaged, and ensure you remain grateful for their daily efforts and ongoing support.

As Richard Branson famously said: “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”

Dream big but be patient

“If your dream doesn’t scare you, it isn’t big enough”.

In business it is so important to be ambitious and have a clear goal or number of goals that you are working towards on a daily basis. Aside from being an excellent measure of success, having overarching goals and objectives will act as your motivation and drive both you and your business forwards. In saying this, it is equally as important to remain patient – success rarely comes overnight and for start-up businesses there can be more bad days that outweigh the good, particularly within the initial stages.

Starting and managing a business is a real measurement of character, but working hard and remaining motivated is one sure way of succeeding.

It costs to win new customers

When you first start a business, we all know that every penny counts. Unfortunately so many start-ups look at service costs for the short term and don’t think about the return. This is particularly true when it comes to marketing. You could have the best service or product in the world, but without marketing how will anyone know it exists?

An innovative and coherent marketing strategy that combines digital and conventional channels may cost in the short term but, if done correctly, will provide you with a positive return on investment and new customers likely to last for the long term.

Also, when you talk about business development, many individuals immediately think of selling or sales – and although the two are closely aligned, Wright explains that they are completely different in strategy and approach.

Mark Wright is director of Climb Online.

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