(Dis)Interest on SME’s

August 15th, 2018
15 August

Business is just business? No, it’s not – and these two news items help to explain why.  If you are a regular reader of this blog – and if you are not, (ha ha!) why not? – you will know that I have been concerned about the wellbeing of some Staffordshire businesses for almost a year now. And by business, I mean SMEs, those small to medium sized enterprises that are the beating heart of the British economy.

As I predicted last year, insolvencies are on the increase and small businesses are feeling the heat. Big businesses in the High Street are falling over too, but outside of the High Street the national and multinationals live in different worlds to our SMEs and two news items this week underline those differences.

First of all, the rise in the Bank rate which is nothing but bad news for small business. Not so for the CBI who represent the bigger beasts of the corporate world. The CBI more or less yawned their way through the announcement. “In line with expectations” they shrugged.

And one of the Big 4 accountants, PwC, were of the same mind saying it “makes sense” both from a short-term perspective and a sustainable long-term monetary strategy. Andrew Sentance, PwC’s senior economic adviser added “From a longer-term perspective, this is hopefully the first step on the road to a more normal level of interest rates – following the lead from the US Federal Reserve.”

Well, Mr Sentance, the sentence I was more interested in was one from Suren Thiry, head of economics at the British Chambers of Commerce, who said the BoE’s recent approach to monetary policy, was “overly focused on reinforcing an idealised direction for rates, rather than on economic reality”. Because a rise in the Bank rate certainly does NOT make sense for a small business – indeed, the increased cost of borrowing may knock a few over.

The second news item was the ICAEW Business Confidence Monitor which revealed that confidence is slumping among SMEs. The ICAEW is the Institute of Chartered Accountants in England and Wales; and particularly in Staffordshire, their members provide professional services to small and medium sized businesses and many are colleagues and friends of mine.

The lack of confidence says the ICAEW, reflects the “fragility and lack of certainty” for businesses around the UK. Iain Wright, the director of corporate and regional engagement added “It is a difficult time to run a business”.

When it comes to what keeps businessmen awake at night, regulation continues to be their chief concern (60%), particularly gender pay gap reporting and general data protection regulations requirements. Of course, large corporations have entire departments devoted to these issues …. not so SMEs.

The Business Confidence Monitor is based on a survey of 1,000 chartered accountants in senior positions in a range of businesses and industry sectors around the UK. Those accountants could not give a fig about the Federal Reserve; their clients are not Amazon but Mr & Mrs Limited.  Business, and the survival of their clients in difficult economic times, is their concern; and business, dear reader, is not just business.

At ipd we specialise is helping SME’s deal with financial difficulties.  Whilst we are quite capable of assisting larger clients, SME’s in particular can struggle to meet the costs of a “big” Insolvency Practitioner.  We recognise that smaller, particularly single owner, businesses will shy away from seeking “expensive” advice in difficult times. 

Our first meeting with any potential client is always free – that’s worth an hour of anyone’s time for coffee and an informal chat on what needs to be done…we are definitely interested in SME’s!