This year’s Budget delivered some little rays of hope for the UK’s SMEs but it was the new employment allowance that seemed to raise the spirits more than any other announcement. Not that we are in any way looking to devalue the cut in corporation tax and increased income tax threshold, but the £2,000 allowance towards National Insurance contributions was a welcome surprise indeed. The incentive behind it could of course not be quarrelled with – it simply aims to make it easier for business owners to recruit new staff, and in turn could be the first step to tackling the always troublesome unemployment rate.
And whilst the level of joblessness may not have been affected as yet – the allowance doesn’t kick in until April 2014 – there are still some positive early signs to report. Most notable is that one in five SMEs admit they have already been encouraged to expand as a result of the government’s announcement. This is according to a survey of 1,895 people conducted on behalf of insurance firm Direct Line for Business. The results reveal a further 33% of respondents saying they are considering recruiting, given the reduced cost in employment, so it seems we are already seeing the scheme begin to work its magic.
Nevertheless, Direct Line points out that despite these encouraging sounds, small companies do not seem to be prioritising business protection, with only 40% believing they have the necessary insurance cover in place for expansion. Instead, business owners are placing more importance on the setting of targets (68%) and the need for comprehensive business and marketing plans (66%). Whether this is down to a lack of understanding of the required insurance policies, or merely a dismissal of its overall significance to their business, it is relatively clear that not having the necessary cover in place is a dangerous game indeed.
“It is encouraging to see that so many UK businesses are looking to expand,” commented Jazz Gakhal, head of Direct Line for Business. “However, it’s concerning that a majority of these businesses aren’t adequately protected for liability or loss, which could spell disaster for them should the worst happen. Taking on staff is a big responsibility and as a business expands it’s easy to neglect some business processes as SME owner-managers are pulled in a myriad of different directions. Protecting yourself against fire, theft, loss of earnings and compensation claims could mean the difference between healthy business growth and a business having to fold.”
Needless to say, we hope that our upcoming feature on business insurance will give a bit more insight into what options our start-ups should be considering from the offset, and where the best places to turn are.