UK: Enterprise Newsletter – Winter 2014

Unleashing British Business
Last Updated: 25 November 2014
Article by Smith & Williamson


Confidence holding steady among UK entrepreneurs

Guy Rigby considers what the latest Smith & Williamson Enterprise Index results tell us about the entrepreneurial engine of UK economic growth.

The Smith & Williamson Enterprise Index measures entrepreneurial confidence in the economy. Now in its second year, the initial benchmark was set at 100.

During 2014, our Enterprise Index respondents have maintained a higher level of confidence than they felt through 2013. The Index has remained in the 105- 109 range, with a closing reading of 106.2 in the third quarter of 2014. This shows a reassuringly steady level of confidence despite the Bank of England signalling that interest rates could start to rise later this year.

Mandatory living wage and boardroom quotas unwelcome

One of this quarter's questions considered the introduction of a mandatory living wage, based on the amount an individual would need to earn to cover basic living costs. Over half of respondents believe that the introduction of a mandatory living wage would adversely affect small businesses. However, arguments in favour suggest that this would help to increase the motivation, attendance and output of employees, who would spend more buying local goods and services.

The Index also found that the majority of respondents (62%) felt that the introduction of mandatory quotas to increase the number of women in boardrooms isn't the best way forward, with 18% remaining 'on the fence' about the issue. This reinforces a growing consensus that mandatory quotas would be counter-productive, undermining the perceived competence of women in relation to future board roles.

Empowering individuals as entrepreneurs

Somewhat surprisingly, half of the Index respondents felt that the emergence of the 'Sharing Economy', evidenced by the significant increase in peer-to-peer platforms and collaborative consumption, will have an adverse effect on their businesses. More positively, however, over 70% of respondents indicated that they expect their export turnover to increase in 2014. John Longworth, Director General of the British Chamber of Commerce believes that "we need to transform the domestic mindset of those businesses by creating an environment that makes it worthwhile for them to export".

A vote for the EU

Over 60% of respondents believe that the UK is better off inside the EU. Mark Hindmarsh of Versatile Connections, said "the EU is the UK's main trading partner worth more than £400bn a year... Staying in the EU means the UK is more likely to be in a position to win new trade deals as opposed to being an independent, outside EU player". The contrary view is that the UK and the EU would remain key trading partners irrespective of the UK's EU membership.


Following a period of prolonged uncertainty, it's encouraging to see a steady level of optimism returning among the UK's entrepreneurs. The findings on the Sharing Economy are particularly interesting, with many entrepreneurs appearing to fear the disruption this will bring. In this issue Enterprise welcomes Benita Matofska, a recognised expert and the founder of Compare & Share, who predicts its continuing explosive growth and encourages entrepreneurs to get on board.


Key recommendations to oil the wheels of innovation for UK entrepreneurship

The 'Unleashing British Business' forum, hosted by Smith & Williamson in conjunction with Cubitt Consulting, aimed to provide a greater understanding of the issues facing UK entrepreneurs, as well as potential solutions. Our audience of experts discussed the landscape for entrepreneurs and formulated strategic recommendations for the Government. Here is a snapshot of our white paper.

Plugging the equity gap

Key recommendations:

  • Plug the information gap to improve awareness of equity options
  • Remove hostile or restrictive regulations and tax policies for families
  • Encourage equity providers to educate entrepreneurs

The UK needs to create a culture that doesn't inhibit entrepreneurs seeking equity. According to our expert panel, there is plenty of funding available to SMEs, but not enough information to help them understand their options. Education is key to understanding core business concepts and the Government should play its part by promoting basic business knowledge in schools and universities. Private equity and venture capital firms should also take a more proactive role in mentoring and supporting entrepreneurs.

A strong network of peers is another way to fill the information void. The Government should aim to ensure that those seeking equity are aware of investor networks and how to utilise them. The Enterprise Investment Scheme (EIS, SEIS) is helping to increase business angel investment in earlier stage businesses, but the benefits need to be communicated more effectively. The regulations surrounding these schemes can be complex and onerous, and should be simplified.

Family investment is a key source of equity for early-stage ventures and is often denied the benefits enjoyed by individuals who are 'unconnected' investors. More should be done to encourage this. At the same time, many established companies are now backing incubators and accelerators and making direct investment into early-stage businesses. The reintroduction of a Corporate Venturing Scheme by the Government would encourage this important form of investment, bringing wider benefits such as market access, back office services and mentoring.

"It seems complicated and serious to get involved with private equity and you shrink away from it because you don't want to be wrong."

Rupert Collingwood, Founder, The London Management Company

Making debt markets work

Key recommendations:

  • The UK must tackle a culture of risk aversion
  • Improve information channels between lenders and SMEs
  • Increase access to mentoring

Banks claim that while funding is available to strong businesses, many solid candidates are unwilling to take on debt and only a tiny proportion meet stringent lending criteria.

The UK needs to return to a more local and relationship-based form of banking in order to support entrepreneurs. Local savings banks in Germany – where rewards for managers are based on the economic performance of defined regions – may provide a good model for lending to SMEs in the UK.

Government schemes such as the Funding for Lending Scheme (FLS) and the Enterprise Finance Guarantee Scheme have been poorly communicated. SMEs simply don't know where to find unbiased advice and guidance.

"The UK banks... have been gobbled up by global banks, stripping them of their expertise in relationship management and leaving entrepreneurs without access to mentoring."

Director, leading family wealth office

The red tape challenge

Key recommendations:

  • Communicate Government successes more effectively
  • 'Name and shame' regarding company payment terms
  • Ease the burden of the public procurement process

The Small Business, Enterprise and Employment Bill is a welcome initiative to ease the burden of red tape, but it's vital that channels of communication between the Government and SMEs are improved. Recent reports suggest that MPs, even at the highest level, understand too little about entrepreneur-friendly policies.

A further recommendation is that public companies should be forced to publish payment terms and average payment times so that SMEs understand the level of risk involved. Payment periods of more than 60 days should be abolished as they create an unsustainable environment for SMEs.

'Lighter touch' regulation of hiring and firing by SMEs, allowing them to flexibly downsize in difficult times, would be a major benefit and keep many more businesses going. More supportive policies would encourage SMEs to take on more staff and self-employed people, in particular, should be encouraged to hire.

"The Government needs to focus on creating better red tape rather than more red tape."

Dale Murray, CBE, tech entrepreneur and angel investor

Tax policies for growth

Key recommendations:

  • Introduce low, simple, consistent tax rates to foster long-term commitment
  • Set long-term goals for tax policy to support SMEs
  • Champion the contribution of entrepreneurship to GDP and employment

The consensus of our forum was that low and stable tax rates and simple reliefs are essential to promote enterprise and innovation, benefiting society as a whole. Given the current Government deficit, it is suggested that the best way forward is to cut expenditure and raise indirect taxes, rather than direct taxes. The concept of a flat tax rate for entrepreneurs should also be considered to counter the issue of 'double taxation' of both the business and the individual and the rates for SMEs should be lowered in order to help them grow.

There is a growing need for international collaboration to ensure that the cross-border tax system doesn't impede the growth of small businesses across territories. The Government needs to find a way to ease the burden of European VAT on small businesses looking to expand and consider implementing a tax policy to aid exports. Tax policies should encourage SMEs to employ more people so that they can contribute to UK economic growth.

"The starting point should be that whatever a business spends on its business should be tax deductible"

John Whiting, tax director, Office of Tax Simplification

Priming the next generation

Key recommendations:

  • Balance creative, academic and business-oriented education
  • Commit more support to the entrepreneurial agenda in schools
  • Promote corporate projects which encourage entrepreneurship

One of the key trends identified by the forum as vitally important for the success of SMEs and the UK economy is encouraging the next generation to consider entrepreneurship as a viable career option. Head teachers need greater flexibility to shape the agenda of their schools, with more input from parents and students. Inspiration can be taken from revolutionary 'Gazelle Colleges' and 'Entrepreneur Academies', committed to facilitating entrepreneurship.

Fear of failure is a major deterrent to many young people today. The next generation of entrepreneurs needs to understand what defines success and what's required to create viable, sustainable businesses – and have strong role models to inspire them. Schools and universities can provide a safe environment to start a business, with access to mentors and funding.

Larger corporates should be encouraged to be more supportive of SMEs and champion the benefits of 'David and Goliath' working together.

"Practical entrepreneur-focused programmes teaching foundation business skills would be really beneficial to many young people"

Stuart Nicol, founder, Reboot Ventures

Drivers of growth

Key recommendations:

  • Increased investment in digital infrastructure
  • Role models in business and entrepreneurial ambition
  • Simpler access to funding

Investment in mobile and broadband networks yields economic and social benefits. It's essential that the UK extends the reach of secure and robust networks. If future application technologies are to become accessible to businesses of all sizes, personal data, financial information and personal privacy must be protected at all times.

LEPs – partnerships between regional authorities and businesses – localise decision-making and minimise the bureaucracy that often frustrates small business owners. Investing in and getting the best from these partnerships should be a priority.

Finally, the panel cautions against the stifling effect on the growth potential of early-stage businesses of an over-emphasis on exit planning. The adoption of a different mindset, akin to that which is more common in the US, would significantly enhance the potential to create larger and stronger UK businesses from start-ups over the long term.

In the US, when a company is worth $100m it is seen as a good start." Roger Parry CBE, chairman at MSQ Partners

To read this Newsletter in full, please click here.

We have taken great care to ensure the accuracy of this newsletter. However, the newsletter is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.