UK Business Barometer

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October's survey asked for panellists' views on the 'single most important problem' confronting business, then on aspects of red tape: new dismissal rules, new firm formation / small firm growth, Inland Revenue conduct, use of government e-services, also businesses' reactions to unsolicited phone calls, problems for clients of having a small customer base, crime against businesses and discussing business matters with other business advisers.

200 Business Advisers responded to this Survey.

Survey Findings

This month we took a look at views of "the single most important problem" for smaller businesses. We asked panellists to choose their own perceived most important problem from our list. Red tape came out top with 25%, followed by skills shortages and time pressure, with 17%. In our parallel survey of Businesses, the UKBB, red tape came out third with 15%, below market conditions, 30% and time pressure, 24%.

One aspect of red tape which has been increased this month is the requirement to comply with new dismissal rules. This was introduced in an attempt to reduce the number of cases claiming unfair dismissal being brought to the industrial tribunals. The government has introduced a new 13-step procedure requiring employers wishing to terminate an employee's contract to hold several meetings with the individual concerned before taking action. However 56% of UKBAB respondents and 50% of UKBB respondents believe that the new process is unlikely to encourage parties to resolve their disputes more efficiently, while only 22% of UKBAB and 18% of UKBB respondents are highly or moderately highly convinced it will provide that encouragement. At the same time, 30% of UKBAB and 37% of UKBB respondents think it will actually lead to more claims, while those believing that less claims will result are 31% of UKBAB but only 20% of UKBB respondents.

63% of responding Advisers are highly or reasonably highly convinced that red tape discourages the formation of new businesses and/or the growth of small firms, and 59% see the impact of red tape as reducing the number of small businesses and tending to polarise in terms of business size, with micro businesses staying micro, a gap in the middle and then large businesses at the other extreme.

In a comment to a previous survey, one panellist said that they perceived that the Inland Revenue are hardening their line on outstanding tax payments. 46% of this month's respondents agreed with this to a high or reasonably high extent, but 25% either only agreed slightly or not at all.

Electronic tax returns and other e-services offered by government have been developed and improved over recent years. Only 9% of responding Advisers think that clients are using e-services highly or moderately highly, while 55% think clients do not use them at all, or only to a small extent. Businesses responding to the UKBB report a higher take-up than this, at 30% of use to a high or moderately high extent, although 48% either do not use it at all, or only to a small extent.

The May survey asked for views on the plan to extend the Telephone Preference Service to corporate registrants. This month the surveys explored views on making and receiving unsolicited phone calls, by both Advisers and Businesses. With respect to making unsolicited phone calls, the Advisers Survey revealed that 28% of respondents consider cold calling as a successful method of finding new customers, while 27% perceive it as a last resort. 46% don't need to recruit customers this way for their businesses. Businesses are less evenly divided: 32% in favour of cold calling, 20% would only use it if other methods have failed, and 49% say it is unnecessary for their business. As regards receiving unsolicited calls, while 49% of UKBAB respondents either welcome or tolerate them compared to 37% of UKBB respondents, 20% of UKBAB respondents detest them compared to 33% of UKBB respondents.

Dependence on a single or few customers can be a market characteristic (oligopsony), or a deliberate strategy but can also increase business risk. The UKBAB survey showed that 71% of responding Advisers believe that over reliance on a single or few customers is a highly or relatively highly significant problem confronting their customers. A question put in the UKBB October Survey revealed that none of the UKBB respondents are dependent on a single customer but 15% sell over 50% of output to their main customer and 19% sell between 25% and 50% to a single customer. 20% have less than 5% go to a single customer.

Business crime has featured recently in several reports and prompted a question about perception amongst our panellists. 50% of Business Adviser Barometer respondents believe that business related crime has increased either significantly or slightly over the past five years, compared with 46% of Business Barometer respondents. Close to half of the respondents to both Surveys think it has stayed broadly the same, and few believed there has been any decrease.

Business networking has been shown in several surveys and studies to be a supportive means of providing contacts who will offer each other help and information. 88% of Advisers responding to the UKBAB talk to other business advisers monthly or more often - this contrasts with two thirds of UKBB respondents discussing business matters with other small business owners or managers either monthly or even more frequently, while 11% never engage in this way.