The past 12 months has been challenging for everyone across the UK.
No-one would have predicted at the end of 2019, the turmoil that would quickly unfold.
As we hopefully start on the road to normality, there are a number of things we can take from 2020 that will probably become more mainstream in the coming year. Some initiated by the impact of Covid, some accelerated by the changing economy and others that make plain good sense.
A new wave of SMEs will help to reshape the economy
As unemployment rises, so does the rate of newly incorporated businesses. From June through to October this year, 30% more companies were formed compared to the same period last year.
Newly furloughed and unemployed workers are taking matters into their own hands as they face up to a punishing jobs market. And while many will struggle to make it through 2021, the government is recognising that more must be done to support the new wave.
That’s why SMEs should watch out for the government’s White Paper on the UK’s Industrial Strategy, where they will present a raft of new proposals and initiatives designed to support SMEs with their ‘levelling-up’ agenda.
Of course, many of these businesses will also need to adapt quickly to the incoming changes to customs rules and visas when the Brexit transition period ends on December 31st, 2020. Businesses should be preparing legally as best they can, or at the very least they should be preparing a list of questions that they will need answering, even if the answers aren’t currently available.
Wave of legal disputes is set to hit UK businesses
Government protective interventions on issues such as evictions and the pay back of loans will cease to exist in the new year. Possibly, the patience displayed by many business owners will inevitably run thin if their livelihoods come under threat.
One solution will be found through mediation. The Government would be best advised to take action and introduce regulation to ensure mediation is the compulsory first step taken in legal disputes, especially for instances of late payments. This will benefit SMEs by preventing big companies from overwhelming them in court with well-paid lawyers by instead encouraging compromise. It’s a far quicker and cheaper option than entering into litigation, and more importantly, it boasts a 75% success rate.
The economic impact of the pandemic will be felt throughout 2021, which is why the government took the decision to extend the furlough scheme through to the Spring. While this should be welcomed, it will likely mean more furlough fraud litigation.
The speed in which the Government’s Job Retention Scheme was enacted and the initial absence of information resulted in some employers inadvertently misusing it. There have already seen instances where small business owners have received fines up to 100% more than the original loan they received. But HMRC do not want to pursue employers who have made legitimate mistakes and are giving businesses opportunities to rectify their mistakes.
With a difficult tiered system to negotiate and business adapting in order to operate in some form, SMEs could make mistakes without receiving sound legal advice.
The subscription economy comes to law
This will continue to reshape businesses pay for professional services ‘ accountancy (Xero), productivity (Microsoft, Box) and marketing (Wix, HubSpot) are just some examples of subscriptions becoming widely accepted for business consumers.
While the legal sector has resisted innovation over the years, challengers in the legal sector are bringing better ways of accessing services for SMEs.
With Brexit and the pandemic destabilising supply chains and threatening business continuity, SMEs need legal support more than ever. On average, they encounter 8 legal issues every year, 43% of which cost on average £5,000. This is an eyewatering sum for SMEs that often dissuades them addressing legal issues properly, which ultimately costs UK SMEs £13.6bn every year.
That’s why it’s time for a modern approach. Subscriptions improve pathways to legal support by providing SMEs more flexibility and better value for money, while also reducing the strain on lawyers by eliminating the stress of billable hours.
Women in Business
In many ways the pandemic has exasperated the gap between male and female led businesses.
Prior to the pandemic, it was estimated that if women started up businesses at the same rate as men, then up to £250bn could be added to the UK economy by 2025.
Given the nature of how they work and what they produce, science and tech start-ups have thrived during lockdown, while businesses in the retail and hospitality sectors have been hit hardest.
This has been a massive set-back for women in business, who are underrepresented in science and tech, disproportionately more likely to operate a business in retail and hospitality.
But with the rise of flexible and remote work, we should see more female-led businesses emerging and succeeding. The benefits of flexi-work and working remotely are proving out.
Ultimately, the pandemic has further highlighted the need to create better environments and conditions for women to thrive in. Additionally, like any small businesses, they also need access to great legal support and other professional services.