Small firms say government red tape is worse than ever

Keeping up to date with the latest government legislation is the biggest challenge facing Britainís small business community in 2005, according to new research launched today (26 January 2005) by leading cash flow specialist Bibby Financial Services*. A significant 71% of those surveyed cite this as their biggest hurdle for the coming 12 months.

The figures are up a massive 28% on 2004, suggesting that rather than improving business conditions in the UK, the Government is leaving the small business community tied up in more red tape than ever before.

In fact, the Federation of Small Businesses (FSB) argue that any benefits firms may have felt due to the stability of the economy, have been counter-balanced by over-regulation. This finding is backed by the Governmentís own Better Regulation Task Force which recently estimated the cost of regulation in Britain at over 100bn a year - more than one-tenth of the GDP.

Increasing sales turnover over the next 12 months also remains a significant challenge for two thirds of business owners and managers, reflecting the impact rising interest rates, fuel prices and the unpredictable property market are having on the small business community. In fact, nearly half of respondents voiced concerns about their ability to cope with future interest rate rises (46%) and increasing fuel prices (44%).

Despite the Chancellorís upbeat Pre-budget statement, latest economic forecasts** suggest annualised growth of 2.9% will be seen in the first quarter of 2005 - well below Gordon Brownís target of between 3 and 3.5%. A slowing economy is a critical issue for more than half of business owners and managers (60%) who are concerned about maintaining current turnover levels into the New Year - up from 56% in 2004.

Recruitment of skilled staff is yet another area for concern, with some 44% of small business owners and managers believing a lack of the right skills-base may hamper their businessí success in the coming year.

David Roberson, chief executive of Bibby Financial Services, said: ìIn the 2004 Budget the Chancellor pledged he would cut 147 business regulations. However, the day-to-day reality for a significant majority of small business owners and managers appears to be that red tape is getting worse, not better.

ìThe increases in fuel prices, coupled with interest rate rises have undoubtedly affected consumer spending and this is having a knock-on effect for business. The coming year looks set to be challenging for everyone and owners and managers need to ensure they are in top financial shape, with a strong cash flow in place to weather any potential downturn.î