With recent statistics highlighting that unemployment is set to rise in 2012 to 8.8% from the recently reported current 8.3% - will this put further strain on small businesses?

It has been reported that a third of small start up businesses find it difficult to hire suitable employees who are skilled enough for specific jobs. This difficulty will then reflect the success of the business and cause problems as they start up.

The Federation of Small Businesses along with All Party Parliamentary Small Business Group (APPSBG) have launched an inquiry with Iain Duncan Smith, Secretary of State for Work and Pensions. The inquiry aims to look into entrepreneurships - this will help support those aiming to start up a small business. It will also look into barriers that prevent small businesses from starting up successfully including financial restrictions and regulation requirements.  This is in hope that by supporting entrepreneurs they will develop new businesses that can help recruit the unemployed.

Brian Binley MP, Chairman of the Small Business APPG, said: ‘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.’

The government has attempted to tackle this issue already by putting in place measures that will support new businesses, although the FSB’s ‘Voice of Small Business’ index highlights that intentions to employ and business confidence has declined. Therefore the problems that need sorting out and are issued in the inquiry include: hiring skilled staff, regulation restrictions and suitable finance access.

 The FSB is asking 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.’

 (Federation of Small Businesses)

Retail guru, Mary Portas has put together a report for the government which highlights the dangers of the diminishing high street. She has put forward 28 recommendations which will improve retail and business management on the high street so that small businesses will have a level playing field with large scale malls, like the new Stratford City Westfield shopping centre.

The report put together by the retail guru commissioned by David Cameron highlights a crisis point for small businesses, as consumers seem to be favouring online shopping and shopping malls.

The Federation of Small Businesses (FSB) along with other small business representatives, have heavily supported the Portas review encouraging central and local governments to act upon it - with statistics such as 9000 out of the remaining 140,000 town shopping centres expected to close in the next three years.

Mary Portas has recommended in the review that high streets should look to invest in free parking and annual market days to prevent the decline of high street shops. She has worked with the new Stratford City Westfield shopping centre by developing a market stall idea at the mall. With stalls selling food goods, including fresh fruit and vegetables, ladies nightwear, jeans and flowers, to encourage people to shop at similar places on the high street.

In a recent statement she highlighted that the report is supporting the community, by encouraging high street shopping instead of mall and supermarkets, it is an ‘important part of pulling people together’, she said.

The report has been acknowledged by many in government, including David Cameron, but her work and recommendations are at the moment only research and ideas. The government need to act upon this review and implement the suggestions made by Mary Portas, for any changes to be made and prevent a further decline in high street shops.

According to new research small businesses are putting their security into jeopardy because of a lack of awareness of threats to their IT

Internet services company Eclipse Internet carried out the survey, contacting over 1,300 small businesses. It found that over half of those surveyed were not aware of a computer virus called Koobface that targets Facebook & of the potential threat this posed for their businesses.

Only thirty per cent of businesses involved in the research realized that the virus was a potential threat to them Fifty two per cent of the participating firms thought that Koobface was a social networking site, & a further thirteen per cent thought it was a character from a children’s television programme.

Koobface targets the users of social networking sites - Facebook - of which its name is an anagram - Twitter, Bebo, Friendster & MySpace. Designed to designed to infect Microsoft Windows and Mac OS X it is reported that the operators of this scheme have generated over $2 million in revenue from June 2009 to June 2010

According to Wikipedia:  ‘Koobface spreads by delivering Facebook messages to people who are ‘friends’ of a Facebook user whose computer has already been infected. Upon receipt, the message directs the recipients to a third-party website, where they are prompted to download what is purported to be an update of the Adobe Flash player. If they download and execute the file, Koobface is able to infect their system. It can then commandeer the computer’s search engine use and direct it to contaminated websites. There can also be links to the third-party website on the Facebook wall of the friend the message came from sometimes having comments like LOL or YOUTUBE. If the link is opened the trojan virus will infect the computer and the PC will become a Zombie or Host Computer’

Speaking about the need for businesses to be vigilant in protecting data Eclipse Internet director, Clodagh Murphy stated:

“With more and more users logging onto Facebook at work, it is imperative that all businesses are mindful about the impact threats such as the Koobface worm could have on their day–to–day business operations.”

“As small–business owners, you should analyse online and operating systems to determine the areas most at risk. For example, is an organisation’s customer data, internal accounting information or other sensitive data linked to the internet? In order to create a culture of security, small businesses must demonstrate to employees and customers that cyberfraud is a concern you take seriously.”

A recent survey of SMEs has revealed that 46% do not provide a pension scheme for employees leaving little time to prepare for new legislation, aimed at dealing with Britain’s ageing population

In 2012 the Pensions Act 2008 will come into effect making it a legal duty for employers to automatically enroll all eligible employees into a pension scheme & contribute to it. Eligible employees are all UK employees who earn more than the minimum earnings threshold - currently £7,475 - & aged between 22 & 65 (or the prevailing retirement age).

According to the survey – carried out by Sage UK – a third of SMEs are unaware of the impending responsibility for them to provide a Qualifying Pension Scheme, with 54% assuming the Pensions Act will not effect their business.

Businesses will each be given a date - to be determined according to the size of the company - by which the legislation must be implemented. Sage is urging business to prepare now so as to fully understand & minimize the impact on their businesses.

Kathryn Shankland, Product Manager in Sage’s Small Business Division, commented:

“Business owners need to understand how and when this new reform will impact their firm. Even companies that already offer a pension scheme to their employees may still need to change processes, as there is a new minimum requirement that all pensions must adhere to.”

“If business owners are aware of the changes early enough and factor them into their plans and forecasts, it’s possible for firms to continue to grow their business and provide support for their employees’ futures. At the same time, businesses must take the time to effectively communicate the reforms to employees so that they also understand the impact this legislation will have on their finances as employees will have to provide a minimum contribution starting from 1% and rising to 3% by 2017,

unless they choose to opt out within three months. With pensions becoming increasingly important to retaining top employee talent, the importance of getting it right cannot be underestimated.”

The Federation of Small Businesses is also urging businesses to start planning now since the change will have a significant impact on their cashflow.  It anticipates that a company with 4 employees would be looking at additional costs of £2,550 a year.

It is estimated that around 7 million people are not currently saving enough to support themselves once they retire.

Government figures have recently revealed that nearly 2,000 small businesses are facing high energy bills for gas & electricity because inaccurate estimates issued last year have left them with revised invoices.

In 2010 the helpline Consumer Direct was called by 1,848 small businesses to complain that they had received backdated bills.

Audrey Gallacher – head of energy at the energy watchdog Consumer Focus - stated that the problem was due in part to the energy suppliers sending out estimated bills, as well as small companies themselves submitting inaccurate readings.

“This is probably just the tip of the iceberg, because a lot of small firms wouldn’t think of going to Consumer Direct. Many small firms are unaware that they can be back-billed for up to six years. If they get a bill for thousands of pounds in backdated energy charges it can be very difficult for them to pay.”

At the moment there is a voluntary code of practice among the major energy suppliers which in effect means that customers are only liable to receive back dated bills for up to a year. This is not the case with businesses & there are as yet no plans to extend it to business customers.

“We want to see the code extended to cover small businesses, as they do not have the same resources as the big corporations that have experts working on their energy provision.” Said Gallacher, adding that there were nevertheless measures that could be taken by the small businesses themselves to ensure they don’t get caught out by unexpectedly high bills

“Small businesses should make sure they do a thorough check when they move into a new premises to ensure there aren’t multiple meters, and make sure they get their details over to suppliers as soon as possible. If they have any queries about any of their bills, they should inform their provider and get them to review it as soon as possible.”

“Although a supplier has the right to demand an immediate rebate, if they are hit with a large bill, firms should try to negotiate an affordable repayment plan.”

David Caro – energy policy chairman for the Federation of Small Businesses – pointed out the potentially serious consequences for small businesses & said that the situation demanded a ‘radical shake up of the practice of estimated billing’.

“A large unexpected energy bill, particularly in these difficult trading times, can be as serious as the nail in the coffin for a small firm, which is then forced out of business for no fault of its own.”

Small businesses are not doing enough to protect their ideas & creativity according to recent research.

The Intellectual Property Office (IPO) - an executive agency of the Department for Business Innovation and Skills (BIS) - is the official government body responsible for Intellectual Property rights in the UK. This covers designs, trademarks, copyright & patents.

The IPO is charged with monitoring & raising the level of awareness of Intellectual Property – IP. To this purpose it carried out a survey in 2006 to establish a baseline & again more recently specifically to gauge awareness in SMEs.

In this latest IPO survey - covering 20,000 businesses of all sizes - only 15 per cent of small businesses were found to have accessed support to protect their ideas, with only 11 per cent of small businesses allocating responsibility for overseeing their intellectual property rights compared with 43 per cent of larger businesses.

The IPO said that small businesses “risk missing out on valuable income from their creativity.”

Baroness Wilcox – Parliamentary Under-Secretary for Business, Innovation and Skills & minister for IP – commented on the results of the survey during a visit to talk to final year robotics students at the University of Plymouth about the value of their ideas. She said: “Innovation is the backbone of our economy and it’s encouraging that many businesses know the importance of protecting and exploiting their ideas. However, it’s clear that many smaller companies aren’t aware of how to make the most of their IP.”

“As part of the Government’s commitment to helping small businesses, the IPO offers a range of information and services to help companies identify and benefit from their inventions and designs.”

A spokesman for the IPO referred to some of these services which can assist businesses with this issue & which are free.

“We offer a free online IP health check to help businesses understand the processes involved in protecting their ideas and converting them into tangible assets. There are also free IP awareness seminars available for businesses across the UK.”

“It’s vital for businesses to realise that IP can be one of their most valuable assets, demonstrably improving their competitive performance and acting as a measure of innovation and creativity.”

Credit requests from small businesses fall.

As part of its remit to “contribute to protecting and enhancing the stability of the financial systems of the United Kingdom”, the Bank of England needs to be aware of current & changing credit conditions. In order to do so it regularly carries out a survey for lenders the most recent having been conducted between 11 February and 8 March. Lenders were asked about the past 3 months & the coming 3 months.

The findings of the survey regarding small businesses show a marked fall in credit requests for the three months up to early march 2011.  It is thought that this is the result of the combined effects of the weather together with concerns over the governments proposed spending cuts.

Lenders also stated, however, that they anticipated that the second quarter would bring an increase in requests for credit from businesses with an annual turnover of less than £1 million.

The survey also indicated that the availability of loans for small & medium enterprises did not change during the first 3 months of the year.

Default rates and losses were reported to have increased for small businesses, as had spreads. There were small increases in fees & commissions on lending to small businesses.

David Kern – the chief economist at the British Chambers of Commerce (BCC) - commented: “The findings of the survey confirm the difficult circumstances facing the UK economy in the first quarter of the year and the pressures facing businesses, especially smaller firms. While the overall availability of credit has increased a little in the first quarter, the amount offered to small-and medium- sized businesses is broadly unchanged.

“The findings confirm that a lack of demand remains a major obstacle to adequate credit growth. In particular, there has been a sharp decline in demand for credit from small businesses. More worryingly, spreads on lending to smaller companies have increased, adding to pressures on their profits.

“Overall, while there are no major surprises in this survey, it highlights the risks facing the UK recovery and the importance of making every effort to support growth, particularly for smaller firms.”