THE FSB `VOICE OF SMALL BUSINESS` MEMBER SURVEY

Transcription

KEY FINDINGS – UK
THE FSB
‘VOICE OF SMALL BUSINESS’
MEMBER SURVEY
1
Research by Design
This report was prepared on behalf of the FSB by:
Research by Design Ltd
White House
111 New Street
Birmingham B2 4EU
www.researchbydesign.co.uk
2
THE FSB ‘VOICE OF SMALL BUSINESS’ MEMBER SURVEY – UK
CONTENTS
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
About the FSB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Background to the study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Employment, skills and training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Current workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Staffing level changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Changes in wages in last 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Changes in wages in next 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Flexible working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Skills and training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Finance, taxes and cash-flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Access to finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Business Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Profitability change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Payment terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Payment in Arrears . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Late payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Business rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Rateable values, billing and reliefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Growth and innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Barriers to growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Investment in research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Exporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Annex 1 - Business Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Number of businesses owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Legal status and gender of business owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Years of ownership and VAT Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Business sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Age profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Annex 2 - Employment, skills and training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Current workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Staffing level changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Flexible working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Training offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Providers of training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Annex 3 - Finance, taxes and cash-flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Rates of borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Financial performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Payment terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Annex 4 - Growth and innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Business growth over the past 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Growth aspirations over the next 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Internet access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Exporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Annex 5 - Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Getting support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
3
INTRODUCTION
FOREWORD
Since 1974 the FSB has been championing the ‘voice of small businesses’ and in our 40th year we are
able to deliver even more firepower on behalf of our 200,000 members.
This year we publish the 2013-14 members’ survey. This is a significant piece of work bringing greater
understanding to policy makers on small businesses issues across the UK, and how members are faring, as
well as the ongoing barriers facing small businesses.
The ‘Voice of Small Business’ survey is the largest survey undertaken in the UK, and gives us vital evidence
to lobby and influence Government at all levels, on the issues that matter most to our members. These
survey results will be used to better inform all areas of FSB lobbying work.
Our policy, public affairs, and media teams across the UK have worked hard to communicate members’
views to politicians and policymakers with unprecedented success in the last 12 months - witnessed by
the extent of engagement in all areas of the UK.
I would like to specifically mention the FSB’s first policy conference attended by both the Prime Minister
and Chancellor, which was a game changer for the FSB, putting small business issues right at the top of
the political agenda.
This time around the member survey shows a significant change in the confidence of small businesses
compared to 2012 with aspirations to grow and expand at an all time high. It is now our job to influence
Government to put measures in place that help small firms reach their aspirations. This means creating
the right environment for growth, enabling small business to take on new staff, access finance, export and
invest in their products and services, and to ensure the regulatory and other barriers are reduced.
Small businesses are flexible by nature and this survey demonstrates just how they are leading the way
in flexible working practices, with eight in 10 businesses already offering or considering these types of
arrangements. Newly established firms are even more likely to offer flexibility to staff.
Growth is firmly on the minds of our members with two-thirds of all businesses targeting growth - backed
up by our Q1 survey results released in March 2014 with the index being at its highest level since we
started these in 2010. Almost half of all members who set growth as a business objective achieved a rise
in profitability. Our younger FSB members report success with 43% of those aged 35 or under, showing
increased profits in 2013.
Over the last 12 months, small businesses have increased headcount with a further significant proportion
planning to through 2014.
The FSB welcomes the announcement of the Employment Allowance and the £2,000 cut this will bring
in employers National Insurance Contributions from April 2014. The FSB sees this as a significant win for
small businesses, and we look forward to seeing how this translates into jobs in the employment figures in
future survey results.
Despite positive aspirations, cash-flow and accessing finance remain problems for small firms as well
as taxes, energy costs, and regulation being cited as barriers to growth. Some 54% of businesses are
borrowing to ensure cash-flow, up 11% from two years ago, partly due to worsening late payment by
larger firms. We know that micro businesses in particular are finding it more difficult to access finance
than their larger counterparts. We continue to work for members in lobbying for more finance streams
through non-bank lending and greater competition, while keeping the pressure on the big banks to lend
fairly to small firms.
I am grateful to all our members who gave some of their valuable time to take part in this survey to ensure
the ‘Voice of Small Business’ remains the largest small business survey, thus enabling us to fully represent
their views in Westminster and Brussels, in our devolved Parliaments or Assembly, and at a local level.
Yours sincerely,
Mike Cherry LIWSc FRSA
National Policy Chairman
4
ABOUT THE FSB
The Federation of Small Businesses (FSB) is the leading voice of small businesses.
It represents and protects the interests of the self-employed or owners of small businesses across the UK.
The FSB is almost unique in its representation of the interests of genuinely ’small’ business, with much of
its 200,000 members comprising of firms with less than 50 employees.
PL
O
TOR
N
4 MILLIO
SEC
1
4.
LE
W
OR
TE
OP
SMALL BUSINESSES
IN THE UK
IRMS E M
59%
OF PE
4.9M
M
LF
AL
Y
S
The FSB lobbies all levels of Government – in Westminster, Belfast, Cardiff, Edinburgh, Brussels and locally
to ensure the ‘Voice of Small Business’ is heard.
KIN
G IN THE
I
PR
VA
<10 employees
Micro businesses
99%
>1-49 employees
Small businesses
49-249 employees
Medium businesses
Over 99% of firms employ
fewer than 50 people
5
INTRODUCTION
13
58% Limited company
29% Sole Trader
12% Partnership
1% Limited Liability Partnership
is the average number
of years FSB members
own their business
BUSINESS OWNERSHIP
BY GENDER
ly
26%
of members
are educated to at
least degree level
le
>41%
e ly
Sole
29%
2013
ma
2011
a le
m
So
ly
SINCE 2011
m ale
m
20%
5%
n ly
Mai n
17%
l
UP
a le
Ma
i
More younger businesses*
f
Sol el
11%
yf
em
6
le
ale
6%
le
an
d fe
m al e
Accountants
fem
al e
M a i nl y
5%
em
a
*Five years or less
a
lm
E q ua
fem
ale
M ai nl
y
12%
FSB
ale
a
nd
36%
yf
em
ale
Equal m
38%
operate in the education, creative services
and business services sectors
el
Sol
Family and
friends
Top 3 support mechanisms
for businesses
BACKGROUND TO THE STUDY
BACKGROUND AND OBJECTIVES
This report presents the findings of a research study conducted by Research by Design on behalf of the
FSB. The main aims of the study have been to:
• Provide a national profile of FSB members, examining both the characteristics of their businesses and
gauging their views on the key issues they face.
• Build on the FSB’s data series from previous biennial surveys since 2000 and the previous FSB ‘Voice of
Small Business’ Member Survey in 2011 (published in 2012) allowing trends to be tracked over time.
• Provide evidence for FSB teams at a national, regional and devolved level to underpin the policy and
public affairs work they carry out and allow the FSB to take the views and ‘voice of small business’ to
decision makers.
METHODOLOGY
All members for whom a valid email address was held were invited to participate in an online survey.
Around 125,000 members were sent an email invitation containing a link to the survey. Subsequently,
non-responding members were reminded to participate through targeted email correspondence.
The online survey fieldwork dates for this study were:
Invitation email sent to members
7 November 2013
Reminder email sent to non-responding members
14 November 2013
Reminder email two sent to non-responding members
19 November 2013
Reminder email three sent to non-responding members
25 November 2013
End of fieldwork period
29 November 2013
A total of 8,737 members completed the online survey. Data has been weighted by region to reflect the
known profile of the FSB membership.
ANALYSIS AND REPORTING
Tables and charts
The output from the survey is in the form of conventional cross-tabulations. These provide results for the
total sample and various sub-groups of the members’ profile (e.g. sector). Where statistically significant
differences between sub-groups exist, details have been outlined within this report.
Within the main body of the report, where figures are not shown in the charts, these are 3% or less and
where percentages do not sum to 100%, this is due to rounding (or multiple type questions).
The ‘base’ figure referred to in each chart and table is the total number of members responding to the
question.
Where base figures are less than 50, these have typically been omitted from tabular comparisons (e.g. at
a sector level).
Confidence intervals
By the very nature that surveys typically represent the views of a sample population, sampling error must
be considered when evaluating the findings. This is measured by the confidence level and interval of the
data. Most commonly, market research studies require a 95% confidence level, indicating that we can be
95% confident that the estimate has not been arrived at by chance.
The confidence interval shows the variation that may exist in the findings drawn from a sample. For
example, this survey shows that 69.1% of those interviewed are registered for VAT. However, due to
intrinsic characteristics of sampling, this will be surrounded by a confidence interval, in this case ± 1.0%.
This indicates that the real figure (the ‘true’ figure if the whole population were surveyed) lies somewhere
between 68.1% and 70.1%.
7
INTRODUCTION
The table below gives the confidence intervals for those findings that centre around 10% or 90%, 30%
or 70% and 50% given the total study sample size of 8,737 (these assume a 95% confidence level using
random sampling).
CONFIDENCE INTERVALS
Split on question (%’s responding)
Size of sample
8,737
10% or 90%
±
30% or 70%
±
50%
±
0.6
1.0
1.0
Statistical significance
When comparing the results within a sub-group (e.g. comparing sectors), the differences in results are
tested for statistical significance. This way we know whether the differences are ‘real’ or whether they
could have occurred by chance. The test reflects the size of the samples, the percentage giving a certain
answer and the degree of confidence chosen. Assuming a 95% confidence level, the differences between
the results of the two groups must be equal or greater than the values given in the table below to be
statistically significant.
PERCENTAGE DIFFERENCE REQUIRED BEFORE THE RESULTS MAY BE
CONSIDERED STATISTICALLY SIGNIFICANT
8
Size of sample
10% or 90%
±
30% or 70%
±
50%
±
500 versus 500
3.8
5.8
6.2
1,000 versus 1,000
2.8
4.2
4.4
2,000 versus 2,000
1.9
2.9
3.1
EMPLOYMENT,
SKILLS
AND TRAINING
9
SECTION ONE – EMPLOYMENT, SKILLS AND TRAINING
7%
Net increase for both full and
part-time permanent employees
compared with 12 months ago
in
members employ staff
25%
4 5
in
7
10
in
currently offer, or
would consider
offering flexible
working to their staff
members have
increased staff
wages over the
past 12 months
A quarter of businesses plan
to increase their investment
in staff training
53%
of FSB members pay
all of their staff the
Living Wage or higher
EMPLOYMENT, SKILLS
AND TRAINING
CURRENT WORKFORCE
Small firms employ 59.3% of the private sector workforce1 and are critical to job creation. The University
of Westminster found that small and medium-sized enterprises play a disproportionate role in hiring the
unemployed and disadvantaged groups in the labour market compared to large businesses2. This research
found almost nine in 10 of those unemployed found work through a small business, or by setting up a
small firm.
While the UK labour market has been remarkably resilient since the recession, there is still some way to
go before the employment rate reaches its pre-crisis peak. Harnessing the job creation power of small
firms will be crucial to achieving this. Over the past 12 months small businesses have increased their
headcounts and a significant proportion expect to add to their workforce in 2014. This is positive news
for the economy, the public finances and society as a whole. A key policy win for the FSB has been the
announcement of the Employment Allowance. From April 2014, up to £2,000 will be cut from an
employers’ National Insurance Contributions liability.
Currently, six in 10 FSB members employ staff and of those, the mean workforce size of an FSB member
business stands at 10.7 staff, including the owner and any freelance contractors in the business. 40%
of business owners work on their own, while 42% have less than 10 staff members and 6% of FSB
members have more than 20 individuals working in their business.
How many persons work in your business at present (please include yourself, and those working
both full and part-time)?
60%
42%
12%
6%
Employ Staff
Less than 10
10 to 20
More than 20
Base: All members
Base: 8734
The vast majority of members with staff employ at least one person on a permanent full-time basis
(96%). 65% employ at least one part-timer on a permanent basis. In contrast, only 7% of FSB members
employ temporary staff. 9% of members employ casual workers, 7% employ staff on a zero hours
contract, while only 2% employ agency workers. A further 9% of members employ an apprentice.
Interestingly, 19% of FSB members make use of freelance contractors which points to a growing
trend in small firms of outsourcing work or specific tasks to freelancers. From a policy perspective, the
FSB continues to urge Government to simplify the tax code, as regimes such as IR35 continue to be
troublesome for freelancers.
1 B
IS population estimates for the UK and regions 2013, 23rd October 2013 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254552/13-92-business-population-estimates-2013-stats-release-4.pdf
2 Urwin P and Buscha F (2012) ‘Back to Work: the role of small businesses in employment and enterprise’, FSB
11
Including yourself, how many of each of the following work in your business?
Total workforce
10.7
Full time permanent employees
6.1
Part time permanent employees
2.2
Freelance
1
Staff on zero hours contracts
0.5
Casual workers
0.3
Agency workers
0.2
Apprentices
0.2
Full time temporary employees
0.1
Part time temporary employees
0.1
Interns
0.02
Base: 5194
Base: Those employing staff
As would be expected, the structure of the workforce differs depending on the business sector.
A significantly greater proportion of businesses operating in health and social work, leisure and retailing
employ part-time permanent staff. Interestingly, businesses in financial services also employ a greater
proportion of part-time staff.
More businesses engage freelancers in the business, creative, digital and telecoms services sectors. They
are also common in the construction, agriculture, education and health and social work sectors.
Staff on zero hours contracts are most likely to be found in businesses offering education, health and
social work, and leisure services while more businesses engage casual workers in the agriculture, leisure,
retailing and personal services sectors.
STAFFING LEVEL CHANGES
With economic recovery in full swing and confidence returning to the small business sector, firms are
increasing headcount. In this survey, FSB members report a net increase in staffing levels across each
of the given staff types compared with 12 months ago. The net increase for both full and part-time
permanent employees is 7%.
Looking forward over the next 12 months, the majority of members predict they will employ at least
the same number of staff. Encouragingly, a significant proportion identifies net increases in planned
employment, most noticeably for permanent staff (+16% net increase). This reflects the strengthening
business environment and suggests many small firms are now reaching full capacity. Going forward,
measures the FSB called for, such as the Employment Allowance - which comes in in April 2014 and will
cut the first £2,000 in annual employer National Insurance (NI) contributions - should encourage more
firms to invest in their workforce and increase headcount.
How have your staffing levels changed compared to 12 months ago?1
How do you expect your staffing levels to change over the next 12 months?2
Full-time permanent
compared to 12 months ago1
21%
61%
Full-time permanent over
the next 12 months2
19%
52%
Part-time permanent
compared to 12 months ago1
17%
56%
Part-time permanent
over the next 12 months2
15%
Increased
42%
Stayed the same
Base: 1. Those employing staff 12 months ago
2. All members
12
Decreased
14%
3%
27%
10%
3%
4%
16%
40%
NA/I do not /did not employ this type
Base: 3823-7958
PAY
During the recession, many small firms attempted to contain labour costs by freezing or reducing salaries.
This enabled employers to keep people in work and avoid redundancies, which were more prominent in
large businesses3. After several years of wage restraint, it is encouraging that the vast majority of small
firms are beginning to raise wages again.
In this survey, members were asked about staff pay against various thresholds. This includes the National
Minimum Wage, which is currently £6.31 per hour for adults, and the Living Wage, a voluntary rate of pay
which is set at £8.80 in London and £7.65 in the rest of the UK.
Of those employing staff, the vast majority of FSB members employ at least one person at a rate at or
higher than the Living Wage (85%). Interestingly, more than half of FSB members (53%) pay all of their
staff the Living Wage or higher.
As would be expected, higher wage earners are most prevalent in London and the South East of England,
reflecting the economic strength of the capital.
Businesses in engineering, financial services and business services are more likely to pay staff at the Living
Wage or higher, nine in 10 staff in engineering and financial services employ staff on wages higher than
the Living Wage. In addition to these sectors, firms in construction, creative services, digital and telecoms,
education and the energy, water and environmental sectors are more likely to pay all of their staff the
Living Wage or higher.
How many of your workforce do you pay (including yourself) higher than the Living Wage,
at the Living Wage….?
53%
Living Wage or higher
85%
15%
7%
Between Living Wage
and Minimum Wage
34%
66%
4%
Minimum Wage
23%
77%
All staff
Some staff
No staff
In contrast, just under a quarter of FSB members have at least one member of staff earning the Minimum
Wage, while only 4% pay their entire workforce the minimum wage. This rises to 7% among those
operating in the hotel, catering and leisure sector and 9% in retailing.
Evidently, businesses in these sectors will be mostly affected by annual increases in the National
Minimum Wage. The FSB has therefore called on the Low Pay Commission – the independent body that
advises Government on the minimum wage – to ensure that the new October 2013-14 Minimum Wage
rates are affordable for these sectors. We have also argued for Government to make a concerted effort
to reduce other costs affecting small firms in these sectors, such as business rates and utilities, in order to
help them accommodate annual rises in the National Minimum Wage and retain their existing workforce.
It is interesting to note that 7% of members pay all of their staff a rate of pay between the Minimum
Wage and the Living Wage. Many of these will also be affected by rises in the Minimum Wage, as
businesses seek to maintain wage differentials.
3 S ee for example, Crawford C, Wenchao J and Simpson H (2013), ‘Productivity, Investment and Profits during the Great Recession: Evidence
from UK Firms and Workers’, Institute for Fiscal Studies.
13
CHANGES IN WAGES IN LAST 12 MONTHS
As mentioned, many small businesses are beginning to increase staff wages. This is largely in response
to the improving economic climate and growing business confidence, with members reporting growing
demand for their products and services and higher profits which in turn allows them to reward their staff.
Seven in 10 members report raising staff wages over the past 12 months, with one third having raised
wages for all staff. Just 8% of members have only increased wages for Minimum Wage earners in their
businesses. While the differences are marginal, proportionately more members in Scotland and the East
Midlands have raised wages for all staff compared to members in London, Northern Ireland and Wales. 4
Which of the following statements best describes your approach to staff pay
over the past 12 months?
33%
29%
8%
25%
1%
4%
I have raised
wages for
all staff
I have raised
wages for
some staff
I have only raised
wages for those on
minimum wage
I have frozen
wages for
all staff
I have reduced
wages for staff
in the business
Not applicable to
my business
(e.g. we are
a new startup)
Base: 5155
Proportionately more owners of small businesses (41%) have raised wages for all their staff compared to
those running micro businesses. At a sector level, significantly more businesses operating in engineering
(45%), manufacturing (44%) and health and social work (40%) have raised wages in the past 12
months. Conversely those in creative services (25%) and construction (29%) are least likely to have
raised wages.
CHANGES IN WAGES IN NEXT 12 MONTHS
Moving forward a similar proportion anticipate raising wages in the next 12 months, with three in 10
predicting a rise for all staff members and 35% for some of their staff. Members in Wales are least
optimistic over the prospect of raising all wages in the coming year. This may be explained by the sectoral
make-up of businesses in this region and wider evidence that the recovery in business confidence remains
fragile in Wales.
Do you envisage changing staff pay over the next 12 months, if at all?
29%
35%
8%
22%
I will raise wages
for all staff
I will raise wages
for some staff
I will only raise wages
for those on
minimum wage
I will not raise
any wages
2%
5%
I may reduce wages Not applicable
for staff in the business
Base: 5155
4 T
he inclusion of London is counterintuitive but largely explained by the higher number of firms that responded ‘not applicable’ because
for instance the business is less than 12 months old (7% compared to 4% in England as a whole). This corresponds with the relatively high
number of start-up businesses in London.
14
Businesses in the engineering, manufacturing, financial services and business services sectors have the
most positive outlook regarding raising wages for all staff in the next year.
Less than one in five of those members functioning in the hotel, catering and leisure sector anticipate
doing the same, although four in 10 plan to raise wages for some staff. Equally, this sector includes the
highest proportion of members who anticipate raising wages solely for those on Minimum Wage (16%).
FLEXIBLE WORKING
Small businesses are by their nature flexible organisations and many realise the benefits of flexible
working to their business. Flexible working is often offered as an employee benefit and staff working
flexibly can often be more satisfied and perform at a higher standard. This in turn boosts the productivity
of the business, while other forms of flexible working (such as working from home) can be a way of
reducing business overhead costs.
Among FSB members that employ staff, around eight in 10 currently offer, or would consider offering
flexible working opportunities to their staff. Only 2% restrict flexible working opportunities to staff who
currently have a legal right to request flexible working (i.e. parents and carers). It is likely that many small
businesses agree to flexible working requests on an informal basis – meaning the planned extension of
the right to request flexible working may not be necessary.
Interestingly, those operating micro businesses are more open to flexible working compared with their
counterparts in small businesses. Proportionately more of the former offer a wide range of options (27%)
versus small businesses (19%).
Among those businesses that employ staff (74%) have at least one member of staff working flexibly. Of
these, just over six in 10 have staff working part-time, which is by far the most common form of flexible
working. Perhaps unsurprisingly, part-time working is primarily driven by two of the largest sectors:
retailing and hotels, catering and leisure.
On average, members operate two forms of flexible working practises. 47% of members currently have
staff working ‘staggered hours’5 while 27% have staff working flexi-time or flexi-hours6. It is much
less common to find staff in small businesses working annualised hours7 or a job share8 basis (4% of
members in both cases).
Just under a third of respondents have staff working from home, rising to around four in 10 in the south
east of England and London. There are fewer working in the same way in Northern Ireland and Scotland.
Digital and telecoms (67%), business services (55%), creative services (50%) and financial services
(49%) are sectors in which working from home is most prevalent.
Interestingly, flexible working is more readily accepted among newer businesses than those in operation
for 20 years or more. This reflects changing business practices which are in large part-linked to the
proliferation of web-based technologies, which make remote working and other types of flexible
arrangements easier.
5 Enabling employees in a workplace to have different start and finish times
6 Where an employee may be required to work within ‘core times’, but outside these times they may have flexibility in how and when they
work their hours
7 Employees work a certain number of hours over the year but they have some flexibility about when they work. There are sometimes ‘core
hours’ which employees regularly work each week, and they work the rest of their hours flexibly or when there’s extra demand at work.
8 Where two employees share the work and the pay of one
15
SKILLS AND TRAINING
Access to skilled staff was cited as the third biggest barrier a business experiences when trying to grow
in the FSB’s ‘Voice of Small Business’ Index9 at the end of 2013. This is ranked above access to finance,
regulation and employment law. This significant statistic demonstrates the need for investment in human
capital to be a priority for the Government.
Schools and colleges also have a crucial role to play. Nearly half of employers do not believe local schools
or colleges prepare young people to a sufficient standard for businesses and employers10. A recent PwC
study of large employers echoes these statistics. The global PwC survey of around 1,300 CEOs reveals
UK business leaders are more concerned about the availability of key skills than any of their Western
European counterparts, rating it as the greatest threat to business growth.11
Not only do schools and colleges need to ensure they are offering young people the right qualifications both academic and vocational - these need to be high quality and taught to a high standard. Educational
institutions also need to ensure as many young people as possible continue to develop their functional
skills to prepare them for the world of work. Added to this, schools and colleges should be offering high
quality work experience, careers guidance, enterprise education and work-related learning.
This latest research shows many FSB members are contributing to improving skills among young people
in the UK and a vast majority of small firms are offering training to their staff.
Around seven in 10 FSB members offer informal on-the-job training that does not lead to an accredited
qualification. Formal training is offered by 47% of businesses, with more than a third offering training
that leads to accredited qualifications.
Training leading to accredited qualifications is more widespread in certain sectors too. Significantly more
of those listed below are offer this to their workforce, compared with 35% in the UK as a whole:
• Education (53%)
• Health and social work (52%)
• Construction (46%)
• Engineering (46%)
• Energy, water, environmental (46%)
9 FSB ‘Voice of Small Business Index’, December 2013
10 FSB Panel Survey, June 2012
11 A Talent Challenge: A time for extraordinary leadership, 16th annual global CEO survey, PwC, 2013
16
Which of the following types of qualifications do you offer to your staff?
Informal on-the-job training
that does not lead to an
accredited qualification
66%
72%
Formal/paid for training
that does not lead to
accredited qualifications
16%
35%
Formal/paid for training
that leads to accredited
qualifications
27%
52%
13%
No training is offered
2%
Micro businesses
Small businesses
Base: 5158
Of those businesses not offering training to their staff, greater numbers are seen in micro businesses;
more micro businesses (13%) do not offer training compared with small businesses (2%).
While 27% of micro businesses provide formal and/or paid for training that leads to accredited
qualifications this figure jumps to 52% among small businesses. Similarly, a smaller proportion of micro
firms offer training that does not lead to accredited qualifications than small businesses.
A recent UKCES employer skills12 survey found the most common reason for businesses not providing
training is the belief all their staff are fully proficient in their roles (69%). However one in 10 said that
they didn’t train because they had no money available for it. This was the second most common reason.
Of those offering informal or formal training that does not lead to accredited qualifications, over eight
in 10 deliver ‘new starter’ training to help familiarise employees with their new role. While around six in
10 offer health and safety or fire training, around half offer technical job specific training. On average,
members offer four types of training to staff.
Among those offering formal training that leads to accredited qualifications half offer sector specific skills
to their staff, while four in 10 offer vocational qualifications. On average, these employers offer 1.8 types
of accredited qualifications to their staff; those in London offer proportionately fewer (1.6).
Businesses most likely to offer sector specific qualifications are energy, water and environmental
companies (72%). Health and social care and education offer the highest proportion of vocational
qualifications at 68% and 64% respectively.
Government funded apprenticeships are offered by around three in 10 firms, rising to 42% in the north
west of England and falling to 18% and 12% respectively in London and Northern Ireland.
12 UK Commission’s employer skills survey 2013: UK results - evidence report 81, January 2014
17
Which of the following types of qualifications do you offer to your staff?
Sector specific qualifications, e.g.
Fork lift truck certificate,
accountancy qualifications
50%
Vocational qualifications,
e.g. BTEC, City and Guilds
41%
Apprenticeships
(Government funded)
29%
Regulatory qualifications,
e.g. IFA Level 4 Award
14%
Apprenticeships
(non-Government funded)
12%
Functional skills qualifications,
e.g. numeracy, literacy and ICT
9%
Bachelor degree or equivalent
5%
Traineeships
(Government scheme)
5%
Master's degree or equivalent
3%
GCSEs or equivalent
1%
A-levels or equivalent
1%
Other (please specify)
5%
Base: Those offering formal training that leads to accredited qualifications
Base: 1672
The FSB has made a number of recommendations for reforms to the apprenticeship system as a way of
improving quality and take-up long-term. Its main call is for a well defined and understood definition of an
apprenticeship, something which the FSB believes has been stretched in recent years, harming the brand.
The FSB agrees with the Government’s vision for the apprenticeship system, which follows the
recommendations of the Richard Review. It should be a high quality, employer-led system which meets
the needs of the modern economy. While the current system has many merits, recent studies suggest
a lack of skilled employees is a major concern for UK employers. Apprenticeships, particularly higher
apprenticeships, should be part of the strategy to deal with this concern. However, the implementation of
any reforms must be done in full consultation with industry and in particular small businesses. If changes
make the system more complex and difficult for small and micro businesses to access, apprenticeship
take-up will suffer.
18
FINANCE,
TAXES AND
CASH-FLOW
19
SECTION TWO – FINANCE, TAXES AND CASH-FLOW
SMALL BUSINESSES
59%
£
MICRO BUSINESSES
43%
Effects of
late payments
20
13
20
54%
43%
Number of businesses
borrowing for cash-flow
£18,700
£28,800
Female business owners
borrow proportionately less
for day-to-day spending
than their male counterparts
20
Five in 10 members were paid late
by at least one of their business
customers in 2013
11
More small businesses access
finance compared with
micro businesses
2013
1
2
3
Reduced profitability (34%)
Late paying suppliers (32%)
Restricted growth (29%)
60%
PAY
BUSINESS
RATES
¼
receive
100% rates relief
FINANCE, TAXES AND
CASH-FLOW
FINANCING
Just under a half of FSB businesses use external finance in their business. The majority are repaying
formal financing taken out more than 12 months ago such as banks and company credit cards and
short-term ‘informal’ finance. Short-term ‘informal’ finance includes sources such as friends, family,
personal credit cards and own savings.
This reflects well the overall picture of small and medium enterprise financing in the UK as reported by
the Bank of England. Net lending figures (borrowing minus repayment) from the major banks remains
negative but gross lending, which is just new-term lending, is showing small increases. However,
repayment of debt is a priority for small businesses.
As a key issue for small firms, the FSB has been active in recommending options to Government to both
promote more competition in the UK finance arena, but also to make the current market work more
effectively. This has included the promotion of alternative lenders who offer all types of finance – shortterm, long-term, debt and equity.
However, the Government can also help small business access finance through the tax system. It has
recently increased the Annual Investment Allowance from £25,000 to £250,000 that ends in 2015.
This allows businesses to offset profits against business investment. We know during an economic cycle,
business investment is often more prevalent after consumer spending and labour markets pick-up. As such,
the FSB recommends keeping the increased allowance in place for a longer period or made permanent.
Which of the following reflects your business's position with regards financing?
We have taken out short-term ‘informal’
business finance in the past 12 months
18%
We have taken out short-term ‘formal’
11%
We have taken out long-term ‘informal’
7%
We have taken out long-term ‘formal’
10%
We are repaying ‘informal’ business
financing taken out over 12 months ago
12%
We are repaying ‘formal’ business financing
taken out over 12 months ago
19%
Note:
Short-term finance = Finance that is taken out for less than 2 years.
Informal business finance = Such as; friends, family, personal credit cards, own savings, etc.
Formal business finance = Such as; banks, leasing, factoring, etc.
Long-term finance = Finance that is taken out for more than 2 years.
Base: 8543
Base: All members
21
Proportionately more small business owners are operate with finance compared with micro (59% versus
43%). This difference is predominantly fuelled by repayments on formal business loans taken out more
than 12 months ago.
Among those taking finance in the past 12 months, just 3% highlight the increase in capital allowances
as impacting their investment decision.
The FSB recommends keeping the capital allowance at the higher level for a longer period. Many small
business owners who plan to invest will have long-term plans and by the time they modify plans, the
increased allowance will fall back to the lower level.
ACCESS TO FINANCE
Of those highlighting borrowing for ‘day-to-day’ spending over the past year, half indicate a value of
£10,000 or less, while a tenth have borrowed £50,000 or more. On average, FSB members have sourced
just over £26,000 of lending, although it is typically below £10,000 among those with a turnover of less
than £100,000. Borrowing is more than £100,000 on average for those with a turnover in excess of
£2 million. The FSB has stated that micro-lending, typically below the £25,000, is hard to source. This is
the case when looking at the BBA Finance Monitor, and why the FSB has made policy recommendations
to increase the scale of Community Development Finance Associations or institutions.
Over the past 12 months, approximately how much has your main business borrowed in
finance for ‘day-to-day’ spending?
Up to £5,000
33%
£5,001 to £10,000
18%
£10,001 to £20,000
17%
£20,001 to £50,000
15%
£50,001 to £100,000
4%
£100,001 to £250,000
3%
More than £250,000
2%
Base: Those taking finance for ‘day-to-day’ spending in the past 12 months
Base: 3396
Probing further into the business profile it is evident that small business owners borrow the largest sum:
£63,100 on average compared with just £15,700 among micro businesses.
Female business owners are borrowing proportionately less than their male counterparts (£18,700 versus
£28,800) and, perhaps unsurprisingly, newer businesses are more cautious in their approach to borrowing
or have greater lending restrictions placed upon them than more established organisations. The FSB
has promoted the Independent Appeals process which is open to all businesses that have had credit
applications rejected. Of those who have appealed, between 30-40% have had the decision reversed.
Across the sectors those in the wholesale trade, renting of machinery and equipment, agriculture and
manufacturing are borrowing the largest sums (in excess of £42,000). This is unsurprising due to the
nature of these sectors and the capital investment costs involved.
22
BUSINESS INVESTMENT
Of those highlighting borrowing for ‘investment in your business’ over the past year, around four in 10
indicate a value of £10,000 or less; one in five borrowed £50,000 or more for the same purpose. On
average, borrowers have sourced £47,400 of lending for this purpose.
Over the past 12 months, approximately how much has your main business borrowed in
finance for ‘investment in your business’?
Up to £5,000
27%
£5,001 to £10,000
15%
£10,001 to £20,000
15%
£20,001 to £50,000
17%
£50,001 to £100,000
9%
£100,001 to £250,000
5%
More than £250,000
5%
Base: Those taking finance for investment in business in the past 12 months
Base: 1274
At a sector level those in transport, agriculture and real estate are borrowing the most significant sums,
each around £90,000 towards business investment. Again there is significant gender imbalance, with
male business owners sourcing significantly more finance than their female counterparts.
Further exploration of business profiles shows small business owners invest considerably more than micro
businesses (£102,700 versus £28,700). Owners based in the north east and south of England have also
invested more than their counterparts in the rest of the UK. Businesses in Wales invest the least in their
businesses: £36,100 on average.
Among those taking finance in the past 12 months, more than half borrowed to ensure cash-flow and
around a quarter to inject working capital into the business or to purchase machinery or equipment.
Significantly more members applied for financial support for each of these reasons compared to 2011.
23
For which of the following reasons, if any, did you apply for financial support?
2013
Ensure
cash-flow
54%
Purchase machinery/
equipment/materials
27%
Inject working capital
into the business
25%
Expand existing
business
15%
Premises improvement
/refurbishment
12%
Business
start-up
10%
Debt
consolidation
9%
Loan extension
or renewal
5%
Business a
cquisition
3%
Purchase land or
office premises
3%
Other
(please specify)
3%
2011
43%
18%
20%
13%
6%
5%
5%
3%
3%
2013
2011
Base: Those taking finance in the past 12 months
Base: 2447-5768
Ensuring cash-flow is less of an issue for younger businesses compared with two years ago; a lower
proportion of members who have established their business within the last two years have borrowed for
this purpose.
24
PROFITABILITY CHANGE
A third of members identify a profitability increase in the past year, while a similar proportion (35%)
claim a decrease. Although the proportion identifying an increase is broadly similar to that reported in
2011, encouragingly the proportion reporting a decrease has fallen significantly (from 54% in 2011 to
34% reported 2013).
How has your business’s profitability changed over the past financial year, if at all?
4%
31%
22%
30%
2%
10%
Decreased by
>50%
Decreased by
1% to 50%
Stayed
the same
Increased by
1% to 50%
Increased by
>50%
Not applicable/
Rather not say
Base: All members
Base: 8585
It is clear that younger members are helping to drive this increase in recorded profitability, with 43% of
those under 35 years of age reporting an increase; falling to just a quarter among those aged 65 and
over. Small business owners are also supporting this growth (39%), versus 32% for micro businesses.
At sector level, proportionately more of the following business sectors report increases in profitability in
the past financial year:
• Digital and telecoms (40%)
• Financial services (40%)
• Wholesale trade (37%)
• Business services (36%)
This shows that despite the Government’s aim of rebalancing the economy with a focus on
manufacturing and exporting, the business service sector is still dominant in the UK and this will continue
for sometime.
To counter this, the current financial year has been more challenging for members operating in the health
and social work and retailing sector, where proportionately higher decreases in profitability have been
recorded. We have heard much from Government to help retailing businesses but many schemes and
reforms are yet to bite. Issues such as business rates, parking and planning all need further work.
25
PAYMENT TERMS
Late payment volumes have increased over the past few years, rising from £18 billion in 2008 to £35
billion in 2012, in part due to the economic climate but also a wider cultural trend of large companies’
approach to their cash-flow. FSB research shows in 2011, 125,000 businesses were almost put out of
business by late payment, and in 2008, 4,000 closed as a direct result.
The Bank of England reported in October’s Agents’ Report that larger firms had extended payment terms
to small businesses, especially in retail and construction. The Bank said this had a damaging impact on
working capital and discounted fees for early payment for businesses would not help.
Around half of FSB members accept payment in arrears, three in 10 accept payment upon delivery
and just over one in 10 accept payment in advance. Payment in arrears is most common among small
businesses (59%).
Length of business ownership impacts on payment terms, with businesses that have been running for
more than 10 years more likely to accept payment in arrears. This may represent greater trust between
seller and buyer. When compared with 2011’s results, significantly fewer businesses required payment in
advance in 2013.
What are your principle payment terms?
2013
47%
Payment in arrears
49%
31%
Payment upon delivery
32%
14%
Payment in advance
20%
7%
Other
7%
2013
Base: All members
2011
2011
Base: 8737-11004
The sector a business operates in also influences payment type: those sectors where payment in arrears
is most common include engineering, wholesale traders, construction and the research and development.
As might be expected this type of payment is less prevalent within retail, hotels and the motor trade;
these sectors most commonly expect payment upon delivery. Payment in advance is most common for
those involved in education and retail. See the annex for a sector breakdown.
26
PAYMENT IN ARREARS
For those accepting payment in arrears, the most common term is 28 to 30 days (monthly); two-thirds
apply this term.
What are your terms for payment in arrears?
6%
12%
2%
66%
4%
1%
7%
2%
7 days
14 days
21 days
28-30 days
(monthly)
60 days
90 days
It varies
Other
Base: Those offering ‘payment in arrears’
Base: 4063
The sectors with the greatest proportion of those using 28-30 day accounts are:
• Sale, maintenance of motor vehicles (77%)
• Wholesale (76%)
• Manufacturing (75%)
• Research and development (74%)
Among those accepting payment in arrears, two in three identify reduced profitability and late payment
of their suppliers as a knock-on business impact
Digital and telecoms (47%), motor vehicle traders (44%), wholesale (42%) and the personal service
sector (42%) most commonly suffer reduced profitability as a result of late payment.
Which of the following, if any, apply as a result of late payment?
Reduced profitability
34%
Late paying suppliers
32%
Restricted business growth
29%
The requirement for additional
borrowing from the financial services
sector (i.e. your bank or other provider)
20%
Difficulties paying staff
15%
Late paying HMRC (PAYE, VAT,
Corporation Tax)
15%
Restricted productivity
12%
Lost contracts
Not applicable - we have no late
payment issues
Base: Those offering ‘payment in arrears’
4%
4%
34%
Base: 4014
27
For those accepting payment in arrears, just over a tenth charge statutory interest for overdue invoices.
Significantly fewer businesses charge interest in Northern Ireland (3%) and in the manufacturing (7%)
and retail (6%) sectors. Members are concerned that charging interest will lead to a loss of future work.
The FSB has recommended a number of helpful measures to help small business complain about late
payment, such as promoting the challenger function on the Prompt Payment Code and making senior
directors in both public and private organisations responsible for prompt payment.
LATE PAYMENT
Just over half (51%) of FSB member businesses report late payment from at least one of their business
customers over the past 12 months.
Among those supplying larger private sector businesses, over half report that payment tends to be late,
while some 36% have a similar issue with smaller private sector businesses.
For those that you have supplied goods and/ or services during the past 12 months, has payment
tended to be (a) early, (b) late (i.e. beyond the stipulated payment period) or (c) on time?
Private sector
(larger businesses >50 employees)
51%
46%
4%
Private sector
(smaller businesses <50 employees)
36%
57%
6%
EU institutions
32%
64%
4%
National Health Service (NHS)
32%
60%
8%
UK Central Government
29%
62%
9%
Government agencies/'quangos’
27%
67%
6%
Local Authorities/Councils
27%
64%
9%
Schools/Universities/Colleges
24%
68%
8%
Devolved Governments
21%
73%
6%
Ministry of Defence (MOD)
19%
70%
11%
Police
17%
73%
10%
Fire services
13%
73%
13%
Late payment
Base: Those supplying goods and/or services
28
Payment on time
Early payment
Base: 89-4609
BUSINESS RATES
Although the operation of non-domestic rating systems differs in England, Scotland, Wales and Northern
Ireland, the common view of small businesses in all four nations is that the system imposes unsustainably
high tax liabilities, and is in need of fundamental reform to make it more proportionate, more transparent,
and more responsive to economic conditions.
In England, the FSB was instrumental in securing the introduction of Small Business Rate Relief in England
from April 2005 and has successfully lobbied for the doubling of the relief to apply from 2010 onwards.
Since then, two reviews by Mary Portas and Bill Grimsey have shifted the focus of the debate on business
rates to its impact on the retail sector, which is experiencing change unprecedented in its scale and speed.
These developments have been reflected in government policy and the Government announced at the
Autumn Statement 2013 that it will provide a relief of up to £1,000 to all occupied retail properties with
a rateable value of £50,000 or less in each of the years 2014-15 and 2015-16. The Government also said
it would introduce a temporary reoccupation relief, granting a 50% discount from business rates for new
occupants of previously empty retail premises in England for 18 months.
The Autumn Statement also acknowledged the need for systemic reforms, committing to reform of
the valuation and appeals system as well as committing to discuss business options for longer-term
administrative reform of business rates post-2017. This debate will have implications for the operation
of the increasingly devolved systems in Scotland, Wales and Northern Ireland who are not waiting for
Westminster. The Welsh Government has responded to the review of business rates policy in Wales, and
the Scottish Government announced a package of reforms in September 2013.
PAYING BUSINESS RATES
Business rates remain a significant issue for FSB members. Among those owning or renting business
premises, six in 10 pay business rates, either as a separate business cost or included within their rental
payments. This statistic is a decrease from the seven in 10 reported in 2011 and may reflect the increase
in working from home among members, which has risen to just over a quarter in the same time period. If
the 100% relief schemes were scrapped, the numbers paying business rates could be expected to rise to
around 86%.
The impact of business rates is subject to geographical variation, with 83% of members in Northern
Ireland and 77% in London paying rates compared to just 35% in Scotland, where almost half receive
100% relief. This latter figure is almost double the UK average of a quarter of businesses receiving
100% relief.
The number of FSB member firms receiving 100% rates relief across the UK rose 11% on 2011. This is a
lower increase than seen in England where the number of beneficiaries of 100% small business rate relief
has risen from 293,000 in December 2010 to 360,000, as announced at Autumn Statement 2013.
Do you pay business rates?
2013
2011
52%
Yes
62%
8%
Yes - included in rent
9%
No
10%
Receiving 100%
rate relief
26%
Not applicable
5%
8%
15%
6%
2013
2011
Base: 5959 (2013)
11,315 (2011)
Base: Those who own/rent premises
29
UK
England
Northern
Ireland
Scotland
Wales
Yes
52%
54%
77%
32%
44%
Yes, included in rent
8%
9%
6%
3%
8%
Receiving 100% rate relief
10%*
9%
7%
13%
11%
No
26%
23%
3%
47%
33%
Not applicable
5%
5%
8%
6%
4%
5,959
4,854
119
677
309
Payment of business rates
Base:
*Significant differences from the totals have been highlighted.
RATEABLE VALUES, BILLING AND RELIEFS
Among those owning or renting premises, around a half across the UK indicate their current rateable
value is less than £12,000. At the other end of the scale, 5% report a rateable value in excess of
£100,000.
What is the current rateable value/Net Annual Valuation (NAV) for your main premises?
Up to £2,000
11%
£2,001 to £6,000
20%
£6,001 to £12,000
17%
£12,001 to £18,000
10%
£18,001 to £25,000
6%
£25,001 to £30,000
3%
£30,001 to £50,000
4%
£50,001 to £75,000
2%
£75,001 to £100,000
1%
£100,001 to £125,000
1%
£125,001 to £150,000
1%
£150,001 and over
3%
Can't remember
21%
Base: 5801
* Northern Ireland does not operate a 100% rate relief scheme. However members may be referring to hardship relief or other reliefs available
such as for post offices in rural areas
30
NATIONAL AND REGIONAL AVERAGE VALUES
The average rateable value for FSB members across the UK is just under £23,000, rising to over £37,000
among small businesses.
Looking at the English regions where the average rateable value is £22,134 the highest average rateable
values were reported in London, followed by the south east, with the lowest reported in the East Midlands
where the average rateable value was around half that found in London. Based on average values and
the relevant multipliers for 2013-14 (47.1p and 46.2p) properties of average value would yield average
bills of £10,425 in England, £13, 843 in London and £7,583 in the East Midlands. It is interesting to note
that the average London valuation is well in excess of the higher £25,500 threshold for the small business
multiplier, and that only the only English region with an average below the English small business rate
multiplier threshold is the East Midlands.
What is the current rateable value/Net Annual Valuation for your main premises?
London
£29,391
South East
£24,318
East of England
£23,054
South West
£22,942
North East
£22,730
West Midlands
£21,619
North West
£20,323
Yorkshire & The Humber
£19,683
East Midlands
£16,414
Base: 5801
31
32
GROWTH
AND
INNOVATION
33
SECTION THREE – GROWTH AND INNOVATION
67% of members say growth is a key
business objective in next 12 months
16% of members currently export
with 8% of members considering
exporting in the future
Water, energy
environmental
Digital and telecoms
sectors seek to
grow most rapidly
60%
Canada and South Africa
are identified as key future
exporting destinations
expect to increase their online
presence in next 12 months
43%
62% of businesses have introduced
new or improved products and
services in last two years
34
of those under 35
report increased profits
in 2013
GROWTH AND INNOVATION
GROWTH
Nearly half of all members (47%) who set growth as a business objective achieved a rise in profitability;
24% actually experienced a profit decrease. As the economy picks up pace, the business landscape will
see more firms grow and prosper but as policy measures to alleviate the worst of the financial crisis are
removed, more firms may also become unviable (so called ‘zombie companies).
Last 12 months objectives vs. Profit achieved
What has been the main business objective over the past 12 months?
How has your business's profitability changed over the past financial year, if at all?
47%
21%
18%
17%
29%
17%
24%
42%
57%
12%
8%
8%
Grow
Profit increase
Maintain
Maintain
Profit decrease
Not stated
Downsize
Base: 7464
Base: All members
Further analysis at a sector level reveals a greater proportion of those operating in energy, water,
environmental and digital and telecoms have sought to grow most rapidly.
Looking forward, a greater proportion of businesses are targeting growth for the next 12 months
compared to last year. Two thirds of all businesses are targeting growth; 47% are seeking to grow their
sales/turnover moderately and one in five are focused on rapid growth.
Those in London and younger businesses (five years or younger) lead the way in terms of targeting
significant business growth over the next 12 months. Furthermore, intentions to trade internationally
show uplift when compared to the previous year, with 3% of members setting this objective (6%
in London).
35
What is the main business objective for the next 12 months?
Grow moderately
(up to 20% per annum)
47%
Remain about the same size
22%
Grow rapidly in terms of turnover/sales
(more than 20% per annum)
20%
Sell/downsize/cosolidate/close
10%
International trade
4%
Acquisition of another business
3%
Hand on the business/succession
3%
Base: All members
Base: 8143
A significantly greater proportion of FSB members have an aspiration to grow over the next 12 months
in the following sectors: wholesale; digital and telecoms; energy, water, environmental; business services;
creative services; and manufacturing.
BUSINESS OBJECTIVE TO GROW OVER NEXT 12 MONTHS:
Sector
Wholesale
79%
77%
Energy, water, environmental
77%
Business services
75%
Creative services
73%
Manufacturing
71%
Education
69%
Financial services
68%
Retailing
68%
Research and development
65%
Real estate
64%
Health and social work
62%
Personal services
62%
Construction
60%
Hotels, catering, leisure
60%
Engineering
59%
Transport
59%
Agriculture, forestry, fishing
56%
Sale, maintenance of motor vehicles
55%
36
% of total
Given that two-thirds of members suggest that their business objective in the coming 12 months is
focussed on growth, it is not surprising that the majority have indicated they are looking to expand
their client base; almost three quarters indicate this. Encouragingly, 21% want to grow by engaging in
international trade (15% identify an increase in exporting while 6% want to import more).
More than six in 10 also expect to increase their online presence in the next 12-month period, though
just a third suggest they will increase their investment in marketing and advertising. Around a third
of businesses indicate they will increase staffing levels and a quarter will increase investment in
staff training.
Do you plan to increase or decrease the following over the next 12 months?
Client base
74%
Online presence
62%
Investment in Marketing/Advertising
34%
Investment in equipment/machinery
33%
Staffing levels
31%
Investment in staff training
25%
Research & development
16%
Exporting
15%
Number of premises/branches
8%
Importing
6%
Base: All members
Base: 7508-8343
A greater proportion of members who have owned their businesses for less than six years are looking to
increase their client base, online presence, staffing levels, investment and research compared to others.
37
BARRIERS TO GROWTH
The vast majority of FSB members identify barriers or obstacles that affect the success of their business.
In keeping with previous biennial studies, the majority (49%) identify the economy as the biggest barrier
or obstacle to success. Although significant, this is 17% fewer than those identifying the same barrier
in 2011 and 23% fewer than those highlighting the economy in 2009’s report when the UK economy
started to show signs of recovery.
Around four in 10 members also identify cash-flow and competition in the market, both in similar
proportions to the statistics presented in 2011. Profit taxes and the cost of energy are identified by
around three in 10. The Government’s Employment Allowance will help those 29% of businesses who
reported employment taxes as a barrier to growth.
Which of the following barriers or obstacles impact on the success of your business?
The economy
49%
Cash-flow
39%
Competition in the market
36%
Profit taxes: corporation tax/VAT
32%
The cost of energy
31%
Employment taxes: PAYE, NI
29%
Cost of utilities
28%
Regulations and enforcement
27%
Business rates
25%
Marketing skills
21%
Increased cost of raw materials
21%
Obtaining finance
18%
Cost of finance
17%
Shortage of skilled staff
15%
Recruiting/retaining staff
15%
Base: All members
Base: 8542
A significantly higher proportion of businesses in the retail and wholesale sectors are impacted by the
economy and also competition in the marketplace.
The full table in the annex shows the variation in the percentage of businesses that claim to be impacted
by the various barriers and obstacles. By way of example, there is a greater proportion of businesses in
Northern Ireland especially that suggest they face issues, particularly around:
• Business rates
• Cost of raw materials
• Cash-flow
• Cost of energy
As many as 14% of small businesses consider lack of reliable and fast broadband connectivity their
main barrier to growth across the UK. With a strong predicted growth in the digital and telecoms sector
– this is a concern for businesses. The digital divide between those businesses that have sufficient digital
connectivity and those who have not is still too great. The FSB would like to see a stronger commitment
by Government to deliver fit for purpose connectivity to the entire UK so all small businesses can access
good broadband connections and take advantage of digital opportunities.
38
The ‘gap analysis’ below shows the differences in the proportions of small and micro businesses that
claim the various barriers and obstacles are impacting on the success of their business. For example, 20%
more small businesses suggest employment taxes are an obstacle. Conversely, 4% more micros suggest a
barrier to success is marketing skills.
Micro businesses
Small businesses
The economy
1%
Cash-flow
2%
Competition in the market
4%
Profit taxes: corporation tax/VAT
16%
The cost of energy
13%
Employment taxes: PAYE, NI
20%
Cost of utilities
12%
Regulations and enforcement
19%
Business rates
20%
Marketing skills
-4%
Increased cost of raw materials
6%
Obtaining finance
5%
Cost of finance
3%
Shortage of skilled staff
18%
Recruiting/retaining staff
17%
Base: Micro: 7202
Small: 1522
39
INNOVATION
Tougher economic conditions has meant cash being diverted to core business activities and taken
away from research and development. It may also be why unemployment has stayed low as businesses
‘hoarded’ labour. The majority of FSB members have been innovative over the past two years; 62% have
introduced new or improved products/services (although this is a decrease from 68% in 2011).
Over the next 12 months, six in 10 plan to maintain this level of innovation. Proportionately more of
those based in London plan to be innovative over this period compared with the rest of the UK. While it is
hard to incentivise innovation, the Government has tried through the Patent Box. This allows firms to pay
a lower rate of Corporation Tax on the income from new products and services.
Have you introduced new or improved products/services (a) in the past 2 years, and (b) do you
have plans to introduce new or improved products/services in the next 12 months?
Past two years
62%
Next 12 months
60%
Yes
No
Unsure
33%
5%
26%
14%
Base: 860-8504
Base: All members
Significantly more small businesses have introduced new or improved products/services over the past
two years or plan their introduction in the next 12 months. Those sectors more likely to introduce new
products or services include:
• Wholesale (81%)
• Education (72%)
For the majority, less than 10% of turnover is spent researching and developing new products
and services.
40
INTELLECTUAL PROPERTY
Around a quarter of members use intellectual property (IP) to protect their work. This has become
increasingly important with the rise of cyber crime. Those business owners based in London are
proportionately more likely to use copyright and trademarks compared to the UK as a whole. Conversely,
fewer firms in Northern Ireland and Scotland protect property using IP.
Which of the following types of intellectual property, do you use to protect
your business’s work, if any?
16%
9%
6%
3%
2%
74%
Copyright
Trademarks
Design rights
Database rights
Patents
None of these/
Not applicable
Base: All members
Base: 8624
Unsurprisingly, significantly more in the creative and digital sectors are protecting their work using IP.
Intellectual property:
Sector
Copyright
Trademarks
Base:
% of total:
16%
9%
8,624
Creative services
44%
10%
572
33%
16%
262
Education
32%
14%
320
28%
25%
81
Business services
25%
11%
1552
22%
14%
165
Engineering
15%
8%
381
Construction
14%
6%
961
14%
9%
383
Wholesale
14%
19%
290
Manufacturing
13%
16%
580
Real estate
13%
9%
462
Retailing
9%
9%
1243
8%
11%
313
8%
6%
940
Transport
8%
4%
303
Personal services
7%
8%
341
Financial services
6%
7%
323
3%
5%
245
41
• Among those with IP, just under a quarter has experienced infringement in the past 12 months, rising
to a third for those located in Yorkshire and the Humber.
• A higher proportion of those in the wholesale (35%) and retail (34%) sectors have experienced
infringement of IP in the past 12 months.
• Just 14% of members with IP have made an IP application within the past 12 months.
INVESTMENT IN RESEARCH AND DEVELOPMENT
In line with growth prospects reported earlier in this report, small businesses will need to invest in new
products and services along with a new customer base to achieve growth. Encouragingly, around half of
all FSB members claim to invest in research and new product and service development. For a third this
spend accounts for up to 10% of turnover.
Approximately what percentage of your turnover is spent on research and developing new
products and services?
0% (None)
39%
Up to 10%
34%
11% to 20%
7%
21% to 30%
4%
31% to 40%
1%
41% to 50%
1%
More than 50%
1%
Unsure
Base: All members
14%
Base: 8600
Just one in 50 members have claimed small business research and development tax credits, while almost
a tenth suggest they have not claimed due to the complexity of the application process.
Enterprise policy needs simplification and this is one example of a well intentioned policy measure from
the Government that has not been well promoted and made overly complex for end users. Anecdotally
we hear from members that claiming research and development tax credits for services is hard, and the
time spent claiming and proving the work is research and development is overly burdensome. If we are to
rebalance the economy and encourage these activities, more needs to be done to increase take-up.
Proportionately more of those in the following sectors have claimed research and development
tax credits:
Among those members who have introduced new products or services in the past two years, around a
quarter believe those new products or services have contributed to more than 20% of revenue.
42
What percentage of your turnover comes from new products or services that have been
introduced in the past two years?
0% (None)
8%
Up to 10%
39%
11% to 20%
17%
21% to 30%
9%
31% to 40%
4%
41% to 50%
3%
More than 50%
7%
Unsure
Base: Those who have introduced new products/services in the past two years
14%
Base: 5254
43
EXPORTING
The Government has emphasised the importance of exporting to rebalance the economy. While the
balance of trade (the difference between imports and exports) has been in negative territory for some
time there was encouraging news in the later part of 2013. Government has said that if more small
businesses exported, the balance of trade could be positive in the coming few years.
Our research shows that fewer than one in five member businesses currently export goods or services
overseas (16%). 8% are actively or likely to consider exporting in the future. The FSB’s recent exporting
report showed rather than further incentives, small businesses needed practical help to make the first
steps in exporting their products and services.
Businesses operating in these sectors are exporting most:
The vast majority claim exporting is not applicable to their business (59%), this proportion is being driven
especially by those in financial and personnel services (both 83%) and hotels and catering (79%). However,
the business service sector is one of the biggest exports the UK has. The Government needs to demonstrate
small businesses can export services not just goods.
Proportionately more businesses in London (26%) and Northern Ireland (29%) currently export; conversely
just 12% in Scotland do this. Overall, 24% of small businesses are exporting compared with 15% of micro
businesses. Analysis by gender reveals that significantly more businesses operated by men export. Among
those exporting, around six in 10 highlight this channel contributes to over 20% of sales turnover.
On average exporting members target eight regions worldwide, with the vast majority dealing with the
European Economic Area and half exporting to the US. These areas are popular due to the locality of the
EU and the language. Those located in the south west and the West Midlands target proportionately more
regions than the rest of the UK (on average, nine regions each).
To which of the following regions do you currently export?
European Economic Area
85%
US
48%
Other European countries
39%
Australasia
38%
Canada
29%
Middle East
28%
Other Asian countries
20%
South Africa
19%
Japan
17%
China
17%
South America
16%
Russia
16%
Other African countries
14%
India
14%
Other American countries
9%
Other
1%
Base: Those exporting
44
Base: 1361
Among those not exporting to these regions currently, Canada and South Africa are identified as key
future exporting destinations by over four in 10. India, South America and China closely follow in terms of
attractive future destinations.
To which of the following regions would you consider exporting to in the future
(as a new exporting market)?
Canada
46%
South Africa
42%
India
41%
South America
41%
China
40%
Australasia
39%
Japan
39%
Middle East
38%
USA
38%
Russia
36%
Other American countries
36%
Other European countries
36%
Other Asian countries
35%
Other African countries
33%
European Economic Area
25%
Other
2%
Base: 841
45
46
ANNEX 1 –
FSB BUSINESS
PROFILE
47
ANNEX 1 – FSB BUSINESS PROFILE
ANNEX 1 –
FSB BUSINESS PROFILE
1.1 NUMBER OF BUSINESSES OWNED
The vast majority of FSB members own, co-own or manage one business; one fifth report owning two
businesses. This pattern is in keeping with results reported in previous FSB biennial studies.
How many businesses do you own, co-own or manage?
73%
1
20%
5%
1%
1%
2
3
4
5 or more
Base: All members
Base: 8704
1.2 LEGAL STATUS
The majority of member businesses are limited companies; 58% indicate this, while just under three in
10 (29%) are registered as sole traders. The difference between micro and small businesses is significant
with 34% of micro businesses operating as sole traders; just 6% for small businesses.
The legal status is in line with that reported in FSB’s 2011 study.
What is the legal status of your main business?
2013
58%
Limited company
57%
29%
Sole trader/ sole
proprietorship
28%
12%
Partnership
13%
1%
Limited liability
partnership
1%
2013
Base: All members
48
2011
2011
Base: 11315-8173
The table below profiles FSB members by sector.
Limited
company
Sole trader/
proprietor
Partnership
% of total:
58%
29%
12%
8,713
Wholesale trade
81%
11%
8%
292
80%
10%
6%
166
Engineering
78%
14%
7%
390
Digital and telecommunications
74%
21%
3%
265
Manufacturing
73%
20%
6%
586
70%
19%
10%
83
Business services
68%
24%
5%
1575
Construction
64%
26%
9%
976
Real estate
63%
23%
12%
465
Education
59%
30%
8%
323
Financial services
59%
27%
11%
325
Transport
58%
32%
8%
305
55%
30%
14%
248
52%
34%
9%
387
Creative services
51%
39%
8%
574
47%
27%
23%
318
Retailing
46%
35%
17%
1256
Personal services
45%
44%
10%
343
43%
28%
27%
954
Legal status of main business:
Sector
Base:
49
1.3 YEARS OF OWNERSHIP
On average, members have owned their business for 13 years (mean), in line with previous studies.
A higher proportion of small business owners (as opposed to micro owners) have run their business for
more than 10 years. Similarly men and older members have the longer track records.
A greater proportion of younger business people are operating in education, creative services and
business services, while those focused on agriculture, engineering, mining and manufacturing have been
operating the longest (on average).
How many years have you owned or co-owned your main business?
2 years or less
11%
3 to 5 years
16%
6 to 10 years
26%
11 to 15 years
16%
16 to 20 years
10%
21 to 30 years
14%
More than 30 years
Base: All members
6%
Base: 8684
1.4 VAT REGISTRATION
Just less than seven in 10 businesses responding are VAT registered businesses, rising to 89% among
small businesses.
Proportionately more men and those owning the business for more than 10 years are VAT registered.
Members operating in personal services, health and social work and financial services sectors are far less
likely to be VAT registered than those specialising in engineering, manufacturing and wholesale.
50
1.5 BUSINESS SECTOR
The sector profile of FSB member businesses is again dominated by those operating in business services,
retailing, construction (and building related activities), and hotels, catering and leisure.
In which sector of industry does your business(s) primarily operate?
Business services
18%
Retailing
15%
Construction
11%
11%
Manufacturing
7%
Creative services
6%
Real estate
5%
Engineering
5%
4%
Personal services
4%
Education
4%
Financial services
4%
4%
Transport
3%
Wholesale
3%
3%
3%
2%
1%
Renting of machinery and equipment
1%
Other
8%
Base: All members
Base:8737
Of those based in London and the south east of England a significantly greater proportion offer business
services. Those owning micro firms and members with five or fewer years’ experience of running their
business are also attracted to providing business services. Members under the age of 35 years and
women are attracted to retailing.
Proportionately more members in the north east and those who have owned their business for more than
20 years work in the construction space.
Female owners and those based in Scotland and Wales have a stronger tendency to manage leisure sector
businesses.
51
The ‘gap analysis’ below shows the differences in the proportions of small and micro businesses that
operate in each of the listed sectors. For example, 7% more small businesses primarily operate in hotels,
catering and leisure compared with micro businesses. Conversely, 6% more micros have a retailing and
business services focus. The sectors are not shown where there is no difference.
Micro businesses
Small businesses
7%
Manufacturing
6%
3%
Education
2%
Wholesale
2%
Engineering
2%
Transport
1%
Renting of machinery and equipment
1%
1%
Construction
1%
Real estate
1%
-1%
Financial services
-2%
Creative services
-4%
Business services
-6%
Retailing
-6%
Base: 7211 (micro)
1524 (small)
52
1.6 EDUCATION
More than four in 10 members (41%) are educated to at least degree level, a significant increase of 5%
from that recorded in 2011. London has the highest proportion of members with a Bachelor’s Degree,
Master’s or Doctorate (58%). Vocational qualifications are least likely to be held in Wales and London.
Which of the following is the highest level of education that you have attained so far?
Bachelor Degree or equivalent
professional or other
qualification
25%
GCSE/O-level/ iGCSE/ English
Baccalaureate or CSE or
equivalent qualification
14%
Vocational qualifications e.g.
City & Guilds, NVQs and SVQs,
BTEC Diplomas, RSA, QCF
14%
Master's Degree, MBA,
equivalent professional
qualification
13%
HNC/HND
12%
AS/ A-level or equivalent
professional qualification or
Baccalaureate
10%
A Doctorate or equivalent
professional qualification
3%
Foundation degree
2%
1%
I have no formal
qualificationss
6%
Base: All members
Base: 8542
The uplift in those being educated to at least degree level is significantly boosted by female owners (47%
have this level of qualification) and younger members of FSB (56% among those aged under 35).
Equally, those who have owned their business for the shortest time are educated to the highest levels (as
the chart below demonstrates).
53
Educated to at least degree level
Proportion with a degree
60%
50%
40%
30%
20%
10%
0%
2 years or
less
3 to 5
years
6 to 10
11 to 15
years
years
Age of business
16 to 20
years
21 to 30
years
More than
30 years
Base: 8490
Analysis at a sector level reveals significant differences abound: these are highlighted in the table below.
At least
degree
level
GCSE/
O’level
Vocational
Qualifications
Base:
% of total:
41%
14%
14%
8,542
76%
2%
8%
81
67%
4%
10%
383
Education
64%
6%
7%
318
Business services
55%
10%
7%
1545
54%
10%
10%
163
Creative services
53%
10%
8%
568
51%
8%
7%
263
Financial services
50%
9%
12%
318
Real estate
40%
15%
13%
456
37%
16%
14%
934
36%
12%
16%
307
Retailing
35%
20%
11%
1233
Engineering
33%
10%
18%
382
Manufacturing
33%
18%
12%
574
Wholesale trade
31%
22%
10%
290
Personal services
30%
14%
25%
338
Construction
30%
16%
20%
943
Transport
20%
22%
20%
293
16%
19%
26%
241
Education status:
Sector
54
1.7 AGE PROFILE
Businesses located in London and Northern Ireland have the highest proportion of younger members;
around three in 10 are under 44 years of age. Eight in 10 FSB members are aged 45 and over.
Within which age band do you fall?
4%
15%
34%
35%
12%
16 to 34
35 to 44
45 to 54
55 to 64
65+
Base: All members
Base: 8477
55
ANNEX 2 – EMPLOYMENT, SKILLS AND TRAINING
56
ANNEX 2 –
EMPLOYMENT,
SKILLS AND
TRAINING
57
ANNEX 2 – EMPLOYMENT,
SKILLS AND TRAINING
2.1 CURRENT WORKFORCE
Six in 10 FSB members employ staff; the table below demonstrates employment levels by sector in which
they are employed.
Employing staff:
Sector
Yes
No
Base:
% of total:
60%
40%
8,737
Wholesale trade
77%
23%
293
Manufacturing
77%
23%
586
71%
29%
249
Engineering
69%
31%
390
68%
32%
954
Real estate
67%
33%
466
66%
34%
166
Transport
64%
36%
305
Retailing
64%
36%
1261
Construction
63%
37%
976
60%
40%
318
Personal services
60%
40%
343
59%
41%
83
59%
41%
387
Financial services
58%
42%
325
Education
55%
45%
325
53%
47%
265
Business services
50%
50%
1578
Creative services
39%
61%
575
58
Among those currently employing staff, the average workforce stands at 10.7. The chart below shows
how each of the sectors differs in its employment of staff. To the right of the average line it shows how
many more people are in the workforce. For example, those in health and social work have the highest
average number of persons working in their business, 10.5 more than the average of 10.7 (21 people
in total).
By contrast the data to the left of the line shows the sectors that are employing fewer people than
average; in the case of retailing, businesses are employing 3.5 fewer (equivalent to seven people on
average).
Including yourself, how many of each of the following work in your business?
Mid-point 10.7
2.7
Business services
-0.5
Construction
0.3
Creative services
-0.3
-0.2
Education
6.7
0.1
Engineering
-0.6
Financial services
-1.3
10.5
2.1
Manufacturing
2.4
Personal services
1.2
Real estate
0.7
-0.2
Retailing
-3.5
-2.3
Transport
0.2
Wholesale
1.1
Base: 5194
59
2.2 STAFFING LEVEL CHANGES
FSB members report a net increase in staffing levels across each of the given staff types compared with
12 months ago. The largest net increase occurs for freelance consultants, followed closely by full and
part-time permanent employees and apprentices (+7%).
How have your staffing levels changed compared to 12 months ago?
Increase
Decrease
Net
difference
Base:
Full time permanent
21%
14%
+7%
4820
Part time permanent
17%
10%
+7%
3823
Freelance
14%
6%
+8%
2586
Apprentices
11%
4%
+7%
2336
Casual workers
6%
4%
+2%
2342
5%
2%
+3%
2321
4%
3%
+1%
2240
4%
2%
+2%
2243
Agency workers
3%
2%
+1%
2156
Interns
2%
1%
+1%
2100
Staff changes over past 12 months
Base: Those employing staff 12 months ago
Looking forward, permanent full-time staff members predict a net increase of 17% in the number of
freelancers they employ, 16% in permanent staff and 12% in part-time staff.
How do you expect your staffing levels to change over the next 12 months?
Increase
Decrease
Net
difference
Base:
Full time permanent
19%
3%
+16%
7958
Part time permanent
15%
3%
+12%
6696
Freelance
19%
2%
+17%
5635
Apprentices
11%
1%
+10%
5282
Casual workers
7%
1%
+6%
5239
4%
1%
+3%
5145
4%
1%
+3%
5068
Interns
4%
0%
+4%
4931
3%
1%
+2%
5075
Agency workers
2%
1%
+1%
4926
Staff changes over next 12 months
Base: All members
60
2.3 FLEXIBLE WORKING
Around eight in 10 businesses employing staff currently offer, or would consider offering flexible working
opportunities to their staff.
Which of the following statements best describes your attitude to employees working flexibly
within your business?
I offer a wide range of flexible
working options to all of my staff
24%
Certain types of flexible working
are currently offered to my staff
22%
I will consider flexible working
requests from staff on an
individual basis
32%
I will only permit flexible working
by those who have a statutory
right to request it (currently
parents with a child under the age
of 17 (18 if the child is disabled)
and child and adult carers)
2%
I do not permit any flexible
working even though I could
probably accommodate it
1%
I do not permit any flexible
working because it is not
appropriate to my business
18%
Base: 5174
61
The table below demonstrates the differences by business sector, years of business ownership
and business size.
Wide
range of
flexible
working
Certain
types of
flexible
working
Will
consider
flexible
working
requests
Do not
permit/
Not
applicable
Base:
Overall
24%
22%
32%
21%
5,174
40%
25%
22%
12%
141
Education
39%
22%
23%
16%
178
Financial services
38%
20%
34%
8%
187
Business services
36%
24%
29%
10%
779
35%
26%
26%
13%
225
Creative services
33%
22%
31%
13%
222
31%
19%
28%
22%
193
27%
24%
28%
21%
109
24%
24%
31%
21%
645
Real estate
22%
22%
35%
22%
309
Retailing
22%
22%
34%
22%
798
Engineering
21%
25%
30%
23%
269
Transport
21%
23%
25%
31%
193
Personal services
20%
28%
32%
20%
203
Wholesale
18%
21%
37%
25%
221
Manufacturing
17%
22%
42%
20%
449
Construction
15%
18%
33%
33%
609
12%
13%
33%
41%
173
2 years or less
33%
23%
30%
13%
392
3 to 5 years
30%
23%
30%
17%
730
6 to 10 years
25%
23%
33%
20%
1306
11 to 15 years
25%
24%
28%
23%
890
16 to 20 years
23%
21%
33%
22%
609
21 to 30 years
20%
19%
34%
26%
835
More than 30 years
15%
17%
34%
34%
386
Micro businesses
27%
21%
31%
22%
3651
Small businesses
19%
25%
36%
20%
1521
Attitudes to flexible working
Sector
Years of business ownership
Business size
62
Of those offering flexible working, 61% have staff working part time and 47% are on staggered hours.
Which of the following types of flexible working do your staff work, if any?
Part-time working
61%
Staggered hours (Enabling employees
in a workplace to have different start
and finish times)
47%
Working from home
30%
Flexi-time /flexi-hours (Where an
employee may be required to work
within ‘core times’, but outside these
times they may have flexibility in how
and when they work their hours)
27%
Compressed working hours
(Employees work their total agreed
hours over fewer working days)
7%
Term-time working (Enabling
an employee on a permanent contract
to take paid or unpaid leave during
school holidays)
7%
Job share (Where two employees
share the work and the pay of one)
5%
Annualised hours (Employees work a
certain number of hours over the year
but they have some flexibility about
when they work. There are sometimes
‘core hours’ which employees regularly
work each week, and they work the rest
of their hours flexibly or when there’s
extra demand at work)
4%
Other flexible working (please specify)
3%
None of these
8%
Base: Those offering flexible working
Base: 4154
63
2.4 TRAINING OFFERED
Almost seven in 10 FSB members offer informal on-the-job training that does not lead to an accredited
qualification. Formal training is offered by 46% of businesses; 35% offer training that leads to accredited
qualifications.
Which types of training do you offer your staff, if any?
68%
22%
35%
2%
10%
Informal on-the-job
training that does
not lead to
accredited
qualifications
Formal/paid for
training that
does not lead to
accredited
qualifications
Formal/paid for
training that
leads to
accredited
qualifications
Other
No training
is offered
Base: 5158
Of those offering informal or formal training that does not lead to accredited qualifications, more than
eight in 10 deliver ‘new starter’ training. Six in 10 offer health and safety or fire training, and around half
offer technical job specific training.
What type of informal/formal training that does not lead to accredited qualifications
do you offer your staff?
Initial training for new starters to
familiarise them with the business
82%
Health and safety/Fire
58%
Technical, job specific training
for new starters
Technical, job specific training
for all staff
51%
50%
IT/software
32%
Office administration
31%
Employability skills training, e.g.
problem solving, communication and
customer care, business and
commercial awareness
22%
Planning/organising
18%
Management/leadership
15%
Basic skills training
e.g. numeracy, literacy
7%
Foreign language skills
1%
3%
Base: Those offering informal or formal training that does not lead to
accredited qualifications
64
Base: 3821
2.5 PROVIDERS OF TRAINING
Of those offering formal training that leads to accredited qualifications, the majority indicate that this is
delivered by a private provider or training business, while around one third deliver it internally.
Who provides the formal training for your staff that leads to accredited qualifications, and
where is it provided?
Within the workplace
53%
15%
2%
34%
10%
Outside of the
workplace
60%
34%
6%
3%
8%
E-learning/
distance learning
42%
8%
5%
6%
44%
Private provider/ training business
College
University
Not applicable
Internally provided
Base: 1008-1507
Base: Those offering formal training that leads to accredited qualifications
Most businesses offering formal training from an external provider are satisfied with the provision. More
than three quarters are satisfied with course content, qualifications offered and the quality of trainers or
materials. Satisfaction with cost effectiveness is lower at 61%.
65
And how satisfied are you with your training provider on the following? (If you have used more
than one provider, please refer to the one you have used most recently)
Cost effectiveness
23%
38%
25%
Engagement with
your business
24%
38%
22%
The overall service
they provide
25%
47%
17% 3% 1% 6%
Quality of trainers/tutors
29%
44%
15% 3% 1% 7%
Quality of course
materials
28%
46%
14% 3%1%
The qualifications
they offer
32%
43%
13% 2%
Course content
30%
49%
6% 2% 6%
5% 2%
9%
8%
10%
12% 3%1% 6%
Very satisfied
Quite satisfied
Neither satisfied nor dissatisfied
Quite dissatisfied
Very dissatisfied
Unsure/ Not applicable
Base: 2204-2237
Base: Those offering formal training with or without qualifications from an external provider
Looking across the different types of qualifications that are offered to staff, fewer members indicate that
they are very satisfied with the bachelor degrees and the level of engagement with their business (15%),
overall service (14%) and cost effectiveness (12%) provided by the training provider.
66
ANNEX 3 –
FINANCE,
TAX AND
CASH-FLOW
67
ANNEX 3 – FINANCE, TAX AND CASH-FLOW
ANNEX 3 – FINANCE, TAX
AND CASH-FLOW
3.1 RATES OF BORROWING
Four in 10 members with a bank loan are paying an interest rate in excess of 6%; the average rate across
all borrowers is 6.7%.
What interest rate are you paying on your main loan (taken out over the past 12 months)?
26%
18%
15%
9%
12%
6%
13%
Less than 4%
5%
6%
7%
8%
9%
10% or more
Base: Those taking a loan
Base: 547
It is clear that micro businesses are paying the highest rates of interest compared with small businesses:
7.3% versus 5.5% on average. Equally, it is those that have been in business the longest who are charged
the lowest rates of interest: 5.5% for those in business over 30 years against 7.5% for those with less
than two years experience.
Over four in 10 of those with an overdraft pay an interest rate above 6%; the average rate stands at
7.3%. 16% reveal a rate in excess of 10%.
What interest rate are you paying on your main overdraft (taken out over the past 12 months)?
26%
16%
15%
8%
11%
4%
4%
5%
6%
7%
8%
9%
10%
Less than 4%
16%
10% or more
Base: Those taking an overdraft
Base: 705
3.2 FINANCIAL PERFORMANCE - SALES VOLUME CHANGE
Sales volume patterns are consistent with those reported for profitability this year. Around four in 10
highlight an increase, similar to that reported in 2011, but encouragingly, just three in 10 identify a
decrease, compared with 47% reported the last time this survey was run; a significant improvement.
Across both profitability and sales volumes, those businesses operating in the North East of England
are most notably out of kilter with the rest of the UK, reporting significantly lower increases and
proportionately higher decreases in both measures.
How has your business’s sales volume changed over the past financial year, if at all?
3%
27%
18%
38%
3%
10%
Decreased
by >50%
Decreased by
1% to 50%
Stayed the same
Increased
by 1% to 50%
Increased
by >50%
Not applicable/
Rather not say
Base: All members
68
Base: 8577
Exploring individual sector successes, significantly more of those operating in the following areas highlight
increases in sales volume in the past financial year:
However, for those in retailing and engineering, proportionately more have been challenged in 2013 by
higher decreases:
• Retailing (37%)
Again, in keeping with statistics reported for profitability, sales volume increases have been driven by
younger members, particularly those aged under 35: 51% record an increase in sales volume. Reflecting
on business size, significantly more small business owners record an increase versus micro ownerships
(51% versus 39%).
3.3 CUSTOMERS
Six in 10 member businesses have supplied the private sector over the past 12 months. Just over half
indicate they have done business with small private sector firms (those with less than 50 employees) and
38% with larger private sector clients in the past 12 months.
Almost four in 10 have customers in the public sector; around a quarter of FSB members conducted
business with schools and other education establishments, 21% with local authorities and 10% with
the NHS. An additional 4% of members supplied the Ministry of Defence.
To which of the following, if any, have you supplied goods and/ or services during
the past 12 months?
All Private
59%
Private sector (smaller businesses
<50 employees)
54%
Private sector (larger businesses
>50 employees)
38%
All Public
38%
Schools/Universities/Colleges
24%
Local authorities/councils
21%
National Health Service (NHS)
10%
Government agencies/'quangos'
5%
Police
4%
UK Central Government
3%
Devolved Government (NI Assembly,
Scottish Parliament, Welsh Assembly)
2%
Fire services
2%
EU institutions
1%
Ministry of Defence
4%
None of these/not answered
32%
Base: All members
Base: 8659
69
ANNEX 3 – FINANCE, TAX AND CASH-FLOW
3.4 PAYMENT TERMS
Payment in arrears is most common in the engineering, wholesale, construction, research and
development, and manufacturing sectors. It is least common within the retail sector, where payment
upon delivery and payment in advance is more prevalent.
Q32. What are your principle payment terms?
In arrears
Upon
delivery
In advance
% of total:
47%
31%
14%
Engineering
74%
17%
5%
390
Wholesale
69%
12%
15%
293
Construction
65%
23%
6%
976
63%
19%
10%
83
Manufacturing
62%
19%
12%
586
61%
22%
9%
166
Business services
60%
22%
12%
1578
54%
31%
10%
318
54%
26%
15%
265
Transport
49%
36%
11%
305
Financial services
46%
32%
8%
325
Real estate
46%
28%
19%
466
Creative services
45%
30%
16%
575
40%
44%
11%
387
Education
36%
29%
28%
325
Personal services
34%
45%
12%
343
31%
52%
10%
249
27%
48%
17%
954
Retailing
25%
41%
26%
1261
Payment terms:
Sector
Base: All members
70
Base:
8,737
ANNEX 4 –
GROWTH AND
INNOVATION
71
ANNEX 4 – GROWTH AND INNOVATION
ANNEX 4 – GROWTH
AND INNOVATION
4.1 BUSINESS GROWTH IN THE PAST 12 MONTHS
Business growth has been an objective for almost half of members in the past 12 months, significantly
higher than those setting the same objective two years ago. In 2013, 36% focussed on growing sales/
turnover by up to 20% per annum and 13% by more.
Proportionately more businesses in London (65%) and those with less than five years of ownership
targeted growth in 2013.
Intentions to commence trading internationally were weak across all business types.
Compared to the average, a significantly greater proportion of businesses in the following sectors had an
objective to grow rapidly: energy, water, environmental; digital and telecoms; education; financial services;
business services. Proportionally more of those in engineering, transport, construction and agriculture,
forestry and fishing sought to remain the same size.
Grow
rapidly
Grow
moderately
Remain
the same
size
Base:
% of total:
13%
36%
39%
8,057
24%
37%
28%
154
Digital & telecoms
21%
34%
32%
254
Education
20%
33%
35%
294
Financial services
19%
38%
32%
305
19%
37%
32%
76
Business services
17%
38%
35%
1466
Creative services
14%
39%
35%
534
14%
37%
36%
355
Wholesale
13%
43%
31%
267
Manufacturing
12%
37%
40%
537
Real estate
12%
38%
37%
437
Retailing
12%
39%
37%
1154
Engineering
11%
30%
46%
361
Personal services
11%
34%
44%
317
Transport
11%
33%
45%
278
Construction
10%
30%
46%
892
10%
36%
40%
874
9%
36%
45%
232
8%
31%
47%
287
Business objective over past 12 months:
Sector
72
The ‘gap analysis’ chart below compares the objectives of micro and small businesses and shows that
proportionally more small businesses have targeted growth over the past 12 months than their micro
counterparts (8% more aimed for moderate growth); more micros aimed to maintain their current size
(6% more than small businesses).
Micro businesses
Small businesses
-6%
To remain about the same size
To grow moderately
(up to 20% per annum)
To grow rapidly in terms of
turnover/sales
(more than 20% per annum)
8%
2%
Downsize/consolidate
1%
1%
Close the business
1%
Base: 6650 (micro)
1405 (small)
Positively, six in 10 of those setting growth as an objective have attained an increase in sales volumes.
However, almost one in five (18%) have recorded falling sales.
Among those looking for sales stability nearly four in 10 report sales decline.
4.2 GROWTH ASPIRATIONS OVER THE NEXT 12 MONTHS
Comparisons between micro and small businesses reveal again that small businesses are targeting
moderate growth (7% more than micros) over the next 12 months; in addition, more of these
organisations are looking towards acquisition (4%) in the coming year to bolster their business.
Micro businesses
To remain about the same size
To grow moderately (up to
20% per annum)
To grow rapidly in terms of
turnover/sales (more than
20% per annum)
Small businesses
-3%
7%
-1%
Sell the business
2%
4%
Start exporting
1%
Hand on the
business/succession
3%
Close the business
-2%
Base: 6716 (micro)
1425 (small)
73
4.3 INTERNET ACCESS
Members access the internet through a variety of channels, though the majority access broadband
through a wired connection. Around a third connect through mobile broadband or a local wireless
network.
Compared with the rest of the UK, proportionately fewer of those in London access broadband through
a wired connection; in the capital, significantly more take advantage of mobile broadband and fibre optic
solutions compared with the rest of the UK.
Which one of the following does your business use to access the internet?
Broadband through a wired
connection
65%
Mobile broadband (3G/ 4G)
e.g. Smartphone, tablet
35%
Broadband through a local
wireless network (private)
34%
Wi-Fi network (public)
14%
High speed broadband
through a fibre optic
connection
12%
USB dongle
7%
Satellite/ Cable
2%
Dial-up connection
1%
Unsure
1%
None of these - my business is
not connected to the internet
2%
Base: All members
Base: 8704
Use of mobile broadband and broadband through a wired connection is more prevalent among younger
members and those in IT focused sectors (e.g. digital and telecoms).
74
The majority of those connected to the internet rate the reliability of fixed internet connections as very
or quite reliable. London based businesses rate reliability highest (90%), compared with 83% in the
West Midlands.
Members’ experiences of mobile connections are clearly less positive; overall six in 10 rate these as
reliable, rising to 71% in the English capital. In the devolved areas, reliability is variable (those rating as
very or quite reliable):
• Northern Ireland (76%)
• England (61%)
• Scotland (58%)
•Wales (54%)
Thinking specifically about the reliability of your business’s internet connections. How reliable
are each of the following types of connection?
Fixed internet
connections (e.g.
broadband, fibre optic,
dial up, etc)
37%
49%
Mobile connections
(e.g. Wi-Fi, mobile
broadband (3G/4G)
13%
48%
Very reliable
Quite reliable
Very unreliable
Unsure/ Not applicable
Base: Those connected to the internet
9% 3%2%
17%
8%
14%
Quite unreliable
Base: 7136-8261
Unsurprisingly, the vast majority of members anticipate an increase in their reliance on the internet in the
next two and five year periods.
75
4.4 EXPORTING
Six in 10 business owners believe that exporting is not applicable to their business, while a further 13%
suggest that they do not export and are unlikely to consider it in the future.
Which one of the following best describes your business’s current approach to exporting?
Currently export goods
and/or services
16%
Previously exported goods
and/or services
3%
Actively considering exporting
goods and/or services
2%
Likely to consider exporting
goods and/ or services
in the future
6%
Do not export and not
considering exporting goods
and/ or services
13%
Not applicable to my business
59%
Base: All members
Base: 8706
70% or more of members in the following sectors indicate that exporting is not applicable to their
business: financial services, health and social work, hotels, catering and leisure, personal services, real
estate and transport.
Of those exporting, overseas sales contributes up to 20% of sales turnover.
Approximately what percentage of your sales turnover is from exported goods,
products or services?
46%
16%
9%
5%
5%
4%
4%
11%
1%
Up to
10%
11% to
20%
21% to
30%
31% to
40%
41% to
50%
51% to
60%
61% to
70%
More
than 70%
Unsure
76
Base: 1412
ANNEX 5 –
SUPPORT
77
ANNEX 5 – SUPPORT
SUPPORT
5 GETTING SUPPORT
To support their businesses over the past year, members have used numerous support mechanisms,
highlighting four of the sources presented on average. More than half have sought support and advice
from accountants, with 45% highlighting the FSB itself.
Around three in 10 have sourced support from family/friends and informal networks, and a quarter have
turned to customers and suppliers. For the vast majority, ‘big business’ has not been a utilised resource.
During the past year, which of the following have you used to source information, advice and
other types of business support?
Accountant
56%
FSB
45%
Informal Networks
29%
Family/friends
27%
Customers
24%
Suppliers
24%
Other Trade Associations
22%
Solicitor
17%
Bank
17%
Mentors
12%
Government funded business support
(e.g. www.gov.uk)
11%
Consultant (compliance and regulation)
9%
Local Government funded business support
7%
Universities/Colleges
5%
Local Government funded help
4%
(e.g. Business Gateway)
2%
EU funded help
2%
(e.g. Welsh Gov't Support)
1%
LEP funded business support
1%
'Big business'
1%
(e.g. nibusinessinfo, InvestNI)
1%
None of these
11%
Unaware of any business support sources
3%
Base: All members
78
Base: 8664
Perhaps unsurprisingly, it is younger FSB members (aged under 35) who use the most support services
(4.3 mean average), compared to those over 65 (3.2 mean).
Analysis by business size reveals the increased usage of support services by small businesses compared to
micros; clearly micros are more self-reliant or make use of informal sources of support (e.g. family/friends).
Micro businesses
Small businesses
Solicitor
16%
Accountant
15%
14%
Bank
13%
7%
FSB
5%
(e.g. www.gov.uk)
5%
Suppliers
4%
4%
4%
3%
Mentors
2%
EU funded help
2%
Customers
'Big business'
Informal Networks
Family/friends
1%
1%
1%
3%
4%
Base: 7161 (micro)
1501 (small)
79
ANNEX 5 – SUPPORT
Among those members using support mechanisms, mentors, family/friends, customers and accountants
are highlighted as being most helpful, with more than nine in 10 extolling their helpfulness. Informal
networks, suppliers and the FSB also clearly offer help that is beneficial to members.
At the opposite end of the spectrum, less than seven in 10 of those businesses making use of support
sources, highlight banks and big business as very or quite helpful.
Across the regions, the use of business support sources is fairly consistent.
During the past year, how helpful have each of the following sources of support been to the
overall health of your business?
Mentors
94%
Family/friends
94%
Customers
94%
Accountant
92%
Informal Networks
91%
Suppliers
91%
FSB
90%
Solicitor
86%
86%
84%
84%
EU funded help
81%
(e.g. www.gov.uk)
80%
78%
(e.g. Welsh Gov't Support)
77%
(e.g. Business Gateway)
75%
72%
71%
(e.g. nibusinessinfo, InvestNI)
70%
'Big business’
69%
Bank
63%
Base: Those using business support and rating as ‘very helpful’ or ‘quite helpful’
80
Base: 30-4860

THE FSB `VOICE OF SMALL BUSINESS` MEMBER SURVEY

Transcription

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