Whether they are put off by the faltering economy, tighter credit controls or the red tape maze of taking on employees, more companies have decided that big is no longer better.
Official figures due out on Wednesday will reportedly show that an increasing proportion of smaller businesses are staying as one-person outfits, like freelancers.
In other words, more and more small traders run companies that just rub along, rather than choosing to create jobs for the growth of their company, and in turn the economy.
“This is an area of immense worry for us,” the Federation of Small Businesses told the Mail on Sunday, which previewed the soon-to-be released figures yesterday.
“We are always encouraged by the number of start-ups, but it is a huge jump from being self-employed to becoming an employer, with all the responsibilities that entails.”
Although some consultants would never take on employees, regardless of the burdens, partly because of the nature of their work, the figures suggest being an employer is being avoided.
In 1999, there were 3.7million firms in Britain, of which 62% (2.3m) were non-employers, compared to 2003 and 2005, when the figure rose to 70% and 72.8% respectively.
In 2006, there were 3.3m sole operators, meaning 73% of businesses were trading without having any staff other than owner-manager on the company’s payroll.
At the same time, the number of firms employing one or more staff has remained static at 1.2million, the paper said of the figures, pre-empting their official release later this week.
Business lobbyists want ministers to lighten the regulatory load for company owners when they take on their first employee; a process seen as a hard-to-reach milestone because of the red tape involved.
Jul 28, 2008
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