Financial forecasts that will affect small business in 2015

by Startacus Admin

Financial forecasts that will affect small business in 2015...

2015 has been hailed as a‘pivotal year for small business’. There are now more startups, self-employed and small businesses than ever before, in fact 99% of the 4.9 million businesses in the UK are small and micro businesses. This is a key sector of the market and it is increasingly important for policy makers to focus on growth and sustainability of small businesses in order to see the British economy flourish.  

There are several factors that could affect how this growth continues throughout the year, here are the top three as provided by our friend and content contributor Sophie Turton of Crunch Accounting.

General Election

The outcome of the General Election will have a significant impact on the future of small businesses in the UK. The Federation for Small Business (FSB) has published a manifesto outlining the changes to policy that need to take place in order to tackle the “dysfunctional” business rate system, the ongoing skills gap and improving access to finance.

In their manifesto, they say:

"The 7 May 2015 General Election presents an opportunity for a new Government to set out its credentials to help these startups and small firms realise their ambitions."

The government must also address the issue of late payments, as money from unpaid invoices has grown from £18.6 billion in 2008 to £46.1 billion today - late payments are one of the leading reasons so many small businesses fail within their first five years.

IPSE, the association of independent professionals and the self-employed, has also called on government to make changes to their policies for the next election. A focus on maternity pay, pension funds and a "tax system for the innovation-driven economy" are all seen as crucial for the continued success of Britain’s army of small businesses and the self-employed.

VAT laws

The introduction of the new EU VAT laws that came into effect from 1st January has sent ripples of panic through the small and micro business communities. The new rules affect those that supply digital services to consumers in European countries. These services include broadcasting, telecoms and e-services and have no cut-off threshold, which means they will also affect micro businesses and those trading as a side venture.

Now the EU VAT rate will be set by the customer’s location and will be charged regardless of whether the business is VAT registered. For example, if a business sells video games in France, they will have to charge the French VAT on the side. This could have a significant impact on how micro businesses operate and many have taken to Twitter under the hashtags #VATMOSS and #VATMESS to express their concern - believing their business will not survive the added burden of extra VAT, alongside the need to collect location data on each digital transaction made.

Check out our blog post for more information on changes to EU VAT.

Economic growth

Britain’s recovery is secure and will continue at a good pace in 2015, despite it being slightly weaker than last year, economists told the Financial Times during their annual economists’ survey.

The responses are the most “upbeat since before the financial crisis” and reflect growing confidence among small businesses, as the public begins to consume more goods and services and entrepreneurship continues to thrive.

Britain witnessed considerable growth of entrepreneurship in 2014, especially within the UK's “Silicon” places - London’s “roundabout”, Cambridge’s “Fen”, Manchester’s “SpacePortX” and Bristol’s “Gorge” - which has meant more people are investing in small business and there will be increasingly more opportunities for startups over the coming year.

Lord Livingston, the Minister for Trade and Investment, recently said small and mid-sized businesses "have the potential to be economic powerhouses for the UK economy, creating jobs and growth for all regions of the UK." But, he added, their success is dependent on expanding beyond domestic markets.

The FSB predict 2015 will be a year of acceleration due to an expansion in manufacturing, energy and construction. However, for this to happen, the new government must focus on building confidence amongst small business owners.

For future finance related news stories and roundups be sure to keep an eye out for Sophie’s monthly finance news roundups that affect small businesses and startups.

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Published on: 12th January 2015