March 2013

Resurgence in entrepreneurial activity across UK & Ireland

Barclays has released a report that suggests both entrepreneurial activity and profitableness is on the rise for growing, private businesses in the UK and in Ireland.

Barclays’ Entrepreneurs Index shows that the amount of shares traded in growing businesses (with turnovers between £5m and £200m) has grown by 14% from second half of 2011 to second half of 2012 – indicating an uplift in entrepreneurial activity. The second half of 2012 saw 24k businesses in the UK and Ireland record shareholder changes, up from 13k in the first half 2012 and 21k in the second half of 2011. In addition, average profitability soared by 54% to £2m, compared to £1.7m in the first 6 months and £1.3m in the final half of 2011.

Based on data from Companies House, the report found that, over the same period, the industrial sector encountered the most significant increase in shares traded with the figure up by 70%.

Start-Up Loans exceed expectations

The Start-Up Loan Scheme (SLS) has delivered support to 2k young entrepreneurs and has helped to start 1k businesses in the past month alone.

SLS is a government backed scheme, chaired by Dragons’ Den entrepreneur James Caan, that provides young entrepreneurs between the ages of eighteen and thirty with a loan, typically £2.5k, and a business mentor. It has surpassed its £10m pilot spend as demand has been high and Parliament recently passed an immediate £5.5m injection of funding to sustain its commitment to applicants until the end of the month. Demand has been driven by post-financial crisis barriers to seed funding while those young with crisis-dampened career prospects have been eager to use the scheme as an avenue for self-employment.

David Cameron, Prime Minister and leader of the Conservative Party, commented that “the success of this scheme shows that young people have got the ideas, the ambition and sheer commitment to get ahead”.

How Businesses can benefit from employing graduates of Vocational Courses and Qualifications.

Students nowadays feel a little more than disappointed with their future prospects in the job market. Especially since they have seen previous graduates struggling to find work. At their expense you can now find employers who will be keen to take on a graduate for a customer service role or office job because they are over-qualified for the position.

This is a reason why more and more students are now choosing to take vocational degrees at Colleges and Universities. For employers and small businesses the shift from students undertaking traditional academic degrees to more vocational courses could lead to several advantages for them.

Job-specific Vocational Degrees equates to a more technically astute professional:

One of the key advantages that a person with a vocational degree holds over somebody with an academic degree is the relevant knowledge and training within a given field. Classes taken are directly related to the profession and they all relate to a specific topic. As a result the student is more likely to hit the ground running whenever they start their new role.

On the job training and internships present a more experienced candidate:

Courses offered in vocational schools can take up to two years to complete. This is because the subjects and courses that students take are centralized on the specific technical skill they are studying. General education courses are limited given that vocational schools concentrate on enhancing their students’ knowledge about job-specific skills, giving more time for on-the-job training and internships. Due to the nature of the courses taken by students, vocational schools are also more cost effective for students than three-year university courses because of the time it takes to finish one’s education. 

A vocational education ensures that the people entering these fields meet the needs of the industry: 

It is true that being highly specialised in a given field places a prospect in an ideal position to get a job. In a recession where employment opportunities are barren, this option could provide lucrative career prospects. Trendy vocational courses from City and Guilds in PR, fashion buying, branding and merchandising are known to take students directly into their chosen career path. However there are still exceptions to this rule. For fields such as information technology, competition for jobs often comes in the form of computer engineers and scientists who have a more comprehensive degree.

House of Lords blocks 'shares for rights' plan

The House of Lords has rejected Chancellor Osborne’s plan to introduce a new owner-employee contract with a vote of 232 – 178 against the proposal.

The so-called ‘shares-for-rights’ bill planned to enable workers to exchange basic rights like unfair dismissal for up to £50k worth of shares in the company they work for. Former Conservative cabinet minister Lord Forsyth described the plans as “ill-thought through, confused and muddled”.

The policy had been criticised by both labour groups and employers as problematic. Aside from the more apparent problems it might have posed in terms of abuse by unscrupulous employers, some in the business community questioned if contracts lacking employee rights might harm the ability of businesses to attract employees.

Budget snippet: Business Bank

George Osborne’s Budget has altered the SME funding landscape very little. For example, the £2k relief on National Insurance contributions paid by employers does not begin to operate until 2014 and the cut in corporation tax, down to 20% from 2015, will leave SMEs that are not yet profit-making enterprises unaffected.

However, businesses and entrepreneurs can expect the British Business Bank to begin investing. In the coming spring it will launch a £300m investment scheme that, alongside private investors, will invest in financial institutions and non-bank lending mechanisms with the purpose of expanding and diversifying the types of lending available to SMEs. Moreover, the British Business Bank will extend the Enterprise Capital Fund programme and develop the Business Angel Co-investment Fund in order to supply early-stage businesses with £75m of new venture capital.

Low take-up for government's £10m high street scheme

A year ago, the government put aside £10m to provide a boost to the UK’s high streets, which are suffering a widespread decline due to pressures from e-commerce. This money was allocated to councils with the worst affected retail sectors in the hope that this would be promptly disbursed to those on the front line.

However, new figures released in response to a Freedom of Information request suggest that very little has actually been spent. Between the 72 councils that responded to the enquiry, 93% was still sitting in council coffers. This suggests that either councils are lacking the motivation to tackle the problem, or that they are simply at a loss at how to go about revitalising their town centres.

'Valley of death' devours science ventures

A report from The House of Commons Science and Technology Committee has concluded that the government’s support for the commercialisation of scientific innovations is inadequate, placing many UK tech start-ups in a ‘valley of death’. 

The result is that many start-ups are bought by foreign companies that then repatriate the wealth and jobs created. One recommendation made by the committee is that the government ought to use the Business Bank proposed by Vince Cable to generate a bond market for medium-sized businesses. It is hoped that the measure would supply tech firms with the cash needed to develop and grow independently before being sold prematurely.

However, The Department for Business, Skills and Innovations responded to the criticisms by highlighting the fact that the government has protected the £4.6b annual budget for science and intends to set up a Business Bank to support the development of diverse finance markets for businesses.

Are the government's Tech City plans mis-directed?

High on the optimism sparked by Cameron’s rousing rhetoric in 2010 about the promise of Britain’s tech companies to replace the financial services as the UK’s flagship industry, many young startups have been inspired to apply for the support and funding released through the government’s Technology Strategy Board (TSB). The SMART grant and the Launchpad initiative, run by the TSB, intend to fill the funding gap for seed and early stage tech companies unable to access bank cash and too small to be of interest to venture capitalists.

However, many companies have spoken out in criticism of the TSB‘s methods. Some have asked as-yet un-answered questions about the opaque decision-making process for entries; others have complained about the lengthy and cumbersome application that ask for details which aren’t available at such early stages of the business. It appears that companies may be put off applying because they are unable to commit time to the application, or because they are turning to alternative sources such as crowdfunding to fill the early-stage funding gap.

Rise in new work boosts output

According to the Lloyds TSB Regional Purchasing Managers’ Index, February saw output improve across nine English regions. 

Seven regions actually recorded growth while the North East and South West saw output fall. The seasonally adjusted index of activity in England was 51.1, the fourth consecutive month the figure stayed over the no-change mark of 50 – albeit, the rise was at a slower pace than the January figure of 51.6, the four month high.

Encouraging signs arose from a rise in new orders, yet cost burdens grew in February with six of the nine regions recording bigger rises in input costs than in January. This was partly due to increasing pressure from rising fuel and utility bills. However, staffing levels remained resilient except in the South West and Yorkshire & Humber, both of which reported lower employment levels in February.

Strongest sales growth for three years

Sales in the UK’s retail sector grew at the fastest rate for three years, according to a report from the British Retail Consortium (BRC).

In February, total sales rose by 4.4%, the sharpest rise since February 2010 when total sales increased by 4.5%, and like-for-like sales were up by 2.7%, the fastest rate since December 2009. Furthermore, online sales were up 10.9% over February 2012, at which point they had risen by 9.9%.

The new figures, a source of optimism for retailers, give the impression that retail is bouncing back from a disappointing close to 2012. Given the recent spate of high-profile administrations, including Blockbusters and HMV, retailers would do well to remain cautious. Helen Dickinson, Director General of the BRC, stated that it was too soon to say the new data demonstrated a “permanent turnaround”.