Small business owners were heading into the Christmas holidays reflecting on the government’s mixed success in supporting enterprise during 2005.
Half of all company directors believe positive steps have been taken by Tony Blair and his government to foster an enterprise culture – one of the state’s self-appointed enterprise aims.
The proportion of entrepreneurs happy with the government’s level of support has increased ten per cent since last year, according to the poll by Ernst & Young, obtained by the Financial Times.
It found that the number one sweetener government could offer to make self-employment and entrepreneurship more appealing would be tax incentives for investment.
Ironically, Gordon Brown recently abolished tax-free profits on the first £10,000 companies make, by introducing a new 19 per cent levy on all profits extracted by UK entrepreneurs.
According to a study by MasterCard International, the prospect of higher tax bills for all limited company owners is yet to impact optimism, as six out of ten directors rate their business outlook as promising.
Moreover, the study found over half of small companies expect to meet their financial goals in 2006, with 20 per cent looking forward to better economic conditions.
Even more positively for the government’s dialogue about creating an environment where enterprise can flourish is the finding that almost 75 per cent of respondents would encourage others to start-up.
Concerns over the larger economic picture would not deter almost three quarters of today’s company directors promoting start-up to a friend this coming year, rather than suggesting they wait until 2007.
Most entrepreneurs are worried about sales and business development over the next 12 months, followed by lesser numbers citing concern about cost increases and the impact of competition.
In terms of expenditure, eight out of ten said technology creates financial opportunities, while two-thirds agree it provides competitive edge, yet the majority will spend less than 10 per cent upgrading systems.
Over half of firms expect higher sales over the next 12 months, during which the biggest influence on their business will be the customer, followed by business partners, a spouse and investors.
The bright outlook for the private sector is not however reflective across the UK. A study by the Institute for Public Policy Research says schemes to boost enterprise in the most deprived parts of the country have had only “lacklustre results.”
Obtained by the FT, the Institute’s research shows that the groups aimed at helping businesses succeed in poorer regions are “complex and confused.”
Too few of the firms responding knew they were in “enterprise zones,” and their support or offering to communities did not match their needs, or help to regenerate their run-down surroundings.
Jan 3, 2006
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