By Claire West
Micro businesses are vital to the future wealth and growth of the UK, yet it is a sector consistently overlooked by Government and financial institutions, says BCA, a specialist in providing financial support to these firms which account for 95% of businesses in the UK.
Richard Morley, founder of BCA says: “Since coming into power the coalition Government has made many bold statements about growth in the private sector and how important it is for small businesses to thrive in order to pick up the shrinkage in the public sector. Yet, grand plans and incentives to stimulate this growth have ignored the 4.5 million businesses which employ one third of people working in the private sector.
“The issue is that the term small business covers all companies employing up to 249 employees, yet how can you lump together the needs of an organisation employing over 200 people alongside someone who owns a shop, a hairdressing salon or runs a pub? Initiatives like the Small Business Finance Taskforce and the Big Society Bank have their place but are completely inappropriate for the vast majority of companies underneath the small business umbrella. It’s about time we had some initiatives of our own.”
BCA has found that the majority of their clients approach them because they are frustrated by the banks. Financial support is difficult to come by and any applications have to be accompanied by business plans and financial forecasts which can take time to prepare. In addition, the banks can be very prescriptive over what they will loan for refusing to lend money for things like stock purchase or marketing which are vital to help a smaller business thrive and grow.
According to Government figures for 2008, there are 4.5 million micro-businesses in the UK with fewer than 10 employees. Most of them are sole proprietorships and their average turnover is less than £500,000.
Last year BCA gave cash injections worth over £10 million to thousands of micro businesses across the UK doubling the number of advances compared with the previous year.
“A familiar story from our clients is that they feel let down by both the Government and the banks, yet micro businesses provide around a fifth of the UK’s economic output so it is important that they feel recognised and included,” Richard concludes.