Gordon Henderson: We can improve prospects for small Scottish businesses

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The year 2012 was a difficult one for many of Edinburgh’s small businesses. They had to face declining footfall and investment, continued tram works disruption and ever-increasing overheads, and this is likely to continue into 2013.

Despite this, a range of recent surveys 
indicate that optimism is growing in the UK. Indeed, the latest Federation of Small Businesses’ Small Business Index reveals that firms are more optimistic about their prospects now than at the same time last year or the year before.

Worryingly, however, optimism is lower in Scotland, and there is no doubt that small businesses need a confidence boost.

Here are five things that the FSB believes will nurture cautious optimism and help our smallest 
businesses drive us back to growth.

First, we know that we need more private sector jobs in the economy. We know that our smallest businesses have the potential to recruit more people than they currently do and we know that for small and micro businesses taking on staff – particularly their first member of staff – is often a daunting milestone.

But expanding the workforce in businesses with a handful of staff can change the character of that business and dramatically increase their capacity. The latest research from the FSB shows that Scotland’s smallest businesses could take on more staff with some practical, tailored support. I’m pleased to say that the city council in Edinburgh has heard our call here and launched a new small business employment support service and business support centre just before Christmas. It is now vital that they make sure that Edinburgh’s small businesses find out about and make use of this welcome new service.

Second, we need to get businesses out of the spare room and into our town centres – a key stage in the development of most businesses. Moves such as rates discount schemes will encourage more businesses to bring empty shops or offices back into use. But when the Scottish Government’s Town Centre Review Group reports in the spring, we must see a renewed focus on getting as broad a range of businesses as possible trading in our town centres – and this includes urban areas such as Gilmerton, Leith, Tollcross and Corstorphine as much as it includes our rural towns.

Third comes action on overheads, such as fuel, finance and utilities. A total of 73 per cent of Scottish FSB members said that the cost of running their business rose during the final quarter of 2012 – with fuel and energy bills disproportionately hitting businesses north of the Border. While the Chancellor’s decision to cancel the proposed fuel duty increase in January was welcome, more needs to be done in 2013 to give firms some certainty over costs.

Next, we must get smart about regulation. The Scottish Government’s Better Regulation Bill, also set to be unveiled this year, is a good opportunity for Scotland to become a model of proportionality and consistency when it comes to regulation. Edinburgh’s small businesses trade outwith the city boundaries, so why should they have to comply with regulation implemented differently in East Lothian and Fife? A consistent approach to regulation by all local authorities in Scotland will lower a significant barrier to trade for small businesses.

Finally, small businesses need the confidence to invest. Mirroring the lower level of confidence felt by Scottish firms, our small businesses are investing less than in the UK’s as a whole. A loss of confidence led to capital investment intentions falling in the third quarter of 2012 and, although rallying towards the end of the year, latest figures show that investment intentions among our members in Scotland remain lower than in the UK as a whole.

The Chancellor’s decision in the autumn statement to increase the Annual Investment Allowance from £25,000 a year to £250,000 will allow businesses to write off much more investment against tax and could boost capital spending in 2013. As investment spending is often a key driver of economic recovery, our largest companies sitting on the largest cash reserves could boost confidence by investing now for the recovery tomorrow.

• Gordon Henderson is the senior 
development manager for the 
Federation of Small Businesses

Success stories

1: Cranachan and Crowdie – opened on the Canongate in June.

2: Smiths Bakery, Deli and Cafe – opened on Mayfield Road in October.

3: The Marshmallow Lady– opened on Rodney Street in July, offering more than a dozen varieties.

4: The Wee Boulangerie – set up by trained baker Katia Lebart, 40, in Clerk Street in July.

Gone for good

1: Avalanche Records – shuts its doors later this month.

2: Clinton Cards – branches shut in May.

3: JJB Sports – jobs lost in the Lothians after chain’s collapse.

4: Woodwares – hardware store on Portobello High Street is selling-up to Sainsbury’s.

5: Comet – placed into liquidation in November.