An Insolvency Practitioner's View of Small Business Reality

Like most interested in the next phase of GB Plc, I have somewhat been intrigued and concerned at just how our new government will square the circle of spending more money, taxing more and, at the same time generating growth.  

As an Insolvency Practitioner and father, I thought I should explain the past few days.

On Sunday I checked my Pension Account and noted that the funds were predominantly held in the US. I queried this on Monday with my advisor who confirmed that the returns in the US were materially better than London, a position made worse after Gordon Brown’s attempts at victimless tax raiding from pension funds.

On Monday I answered questions from Directors from a number of prospective clients; Each case is unique of course but a synopsis of the most asked questions would be:

• What is an Overdrawn Directors Loan Account?
• What is a Personal Guarantee?
• What are the likely actions of a Liquidator when the moral compass of the Director is at odds with that prescribed in the Insolvency legislation?
• Why can’t you provide a quote for a Liquidation without me speaking to you or me knowing the Company name?
• When all the Company has is a Bounce Back Loan why, when I apply for it to be stuck off, is the application opposed?

On Tuesday I had a period of light relief, when I accompanied my son (who has recently set up his own business) to a meeting with a bookkeeper to go through all of those annoying administrative requirements that running a business demand. He was definitely not as energetic at the end of the meeting as he was at the beginning!

On Wednesday we had a compliance review, only to find out the previous reviewers had not had quite the experience that they claimed except of course in the raising of invoices.

On Friday I received notice that a Company which apparently had no lease or chattels and where I was appointed Liquidator on Monday actually had assets in a premises is the northwest!

Against this, every day involved Small Business Owners in various states of panic about what might and might not be in the Budget next week together with the various corruptions of both the current crop of Govt Minsters as they feather their nests with “gifts” and the Post Office whose grey employees saw no reason to identify their own organisations short comings, when they had a never ending source of Small Business owning scape goats to destroy.

And on Saturday I went to watch 30 grown men running around a Rugby field prior to sharing a beer with some former (and current) team members remembering matches and seasons past and debating the problems of running a modern sports club.

So, what does this tell me about the UK as a place to do business?

1. Professional investors go to New York to get returns for their clients rather than London.
2. Your average small business owner is likely good at providing the service or goods which their business delivers. They are less good at dealing with many of the Corporate Governance and Financial tasks that a Company Director needs to consider.
3. The cost and red tape associated with a start-ups in terms of HMRC and Companies House requirements is becoming increasingly material, particularly if you have limited personal financial resources.  
4. Having small businesses owners putting their house on the line being treated as second class by Govt organisations when Politicians can simply laugh off the latest freebee without paying tax is immoral.
5. Regulation, although necessary is becoming an industry.  There is obviously a need to protect the public: But most business owners are just like you and me.  We struggle as regulations keep changing, tax policy becomes more complex and costs generally rise.
6. The amount of capital being removed from the Small Business Community in anticipation of the upcoming budget is stratospheric. I will be reporting just how much capital as left the Small Business Sector between the election and the Budget in November.
7. Social clubs are now more akin to regulated businesses than a bunch of adults seeking to add value to their community.  Whether intentional or not, this is clearly detrimental.    

If we are to maximise the UK growth the small business community requires policy that maximises capital, however generated and reduces the costs of Regulation. A starting point would be the demonstration of some respect from Politicians of what the small business community have to deal with to get thorough each month and the risks they take on.