By Claire West

The government has failed to meet the expectations of entrepreneurs, according to a poll of more than 390 business owners conducted by accountancy firm RSM Tenon.

Two weeks after the General Election, 52% of entrepreneurs felt the new government would support businesses with just 18% believing they would be left unsupported*. However, three months on and expectations have not been met with 40% of entrepreneurs believing that the coalition government has failed so far to support businesses.

Whilst 42% feel they have been backed this still falls 10% short of the original hopes that business owners had for the coalition government. One in six entrepreneurs (18%) are still undecided about the level of assistance from the current government.

How the government can support businesses effectively

RSM Tenon’s Business Barometer, which questioned the opinions of senior staff in the UK between 25 and 31 August 2010, also found that three in five business owners want to see a reduction in the amount of red tape. Nearly half (48%) would like a government u-turn on VAT, keeping the rate at 17.5%.

National Insurance is still considered too high as 42% of entrepreneurs would like the government to reduce it. More than a third (35%) would like to see government incentives to increase the availability of new sources of funding.

Entrepreneurs show resilience as confidence drops only slightly

Confidence amongst entrepreneurs in potential opportunities for business over the next three months has fallen slightly to 43% as optimism for the economic recovery stumbles.

This fall is also balanced by an expectation of an increased demand for goods and services in the next three months — 34% compared to 31% in the last quarter.

Spending levels are expected to remain unchanged with the majority (63%) planning no changes. However, 16% plan to increase levels of spending and 16% plan to decrease costs over the next three months. Areas which are most likely to see a change in spending levels are PR and marketing spend (23% plan to increase spending) and capital investments (25% plan to cut back spending).

Three quarters of entrepreneurs indicated employees at the company would experience pay freezes while 15% are likely to see a reduction in their bonus.

Andy Raynor, Chief Executive of RSM Tenon, said:

“It was always going to be hard for any government to support entrepreneurs with the lack of tools and funds it had available however entrepreneurs were expecting some creativity — new ideas from a new government for the old issues that continue to affect businesses.

“Not all business initiatives would leave the government out of pocket — cutting red tape and putting pressure on banks to start lending again would be relatively cost-free initiatives which would guarantee the support of the business community.”

“Funding is still in such short supply that any available finance has a high price tag or is reserved for only those businesses which fall within a narrow set of criteria. Entrepreneurs have been calling for government support on this issue since the start of the financial crisis.”

“There are a few ‘at risk’ sectors which will be most susceptible to corporate insolvency over the next six months including those which rely heavily on the public sector. Retailers, hospitality and property/construction will continue to be hit as consumers tighten their purse strings.”

"The early signs of optimism we saw at the start of the year have not disappeared; they have simply clouded over briefly as the threat of a double-dip recession continues to hang over the country. Entrepreneurs are proving their strength and resilience by refusing to give up. They are working harder and for longer to ensure their business is in the best position for the long-awaited recovery.”