Levelling up is stalling, as the government needs to push further initiatives to create inclusive growth for small businesses in the UK
In 2019, Boris Johnson’s government came to power on a pledge to levelling up the nation and give those people, communities, and businesses being economically and socially left behind a fair chance of catching up.
This is an important move to help close economic disparity and create more inclusive growth across society. But in the business world, levelling up is stalling.
It isn’t surprising as to why. A skyrocketing cost of living crisis, a 40-year high inflation rate, the doubling of energy prices, and the lingering impact of the pandemic are all coming to the fore.
Of the thousands of small businesses we’ve spoken to, a third said they struggle to compete with big businesses, and one in seven owners said they have never felt more negative about their business’s future.
If businesses can’t grow – neither can the economy
This is alarming. Small businesses are the beating heart of the British economy – they account for around 36% of turnover in the UK private sector and makeup half of the workforce. If they can’t grow, neither can the economy.
The challenge of a turbulent economic climate is putting levelling-up in jeopardy. How do we effectively support our country’s great small business owners?
It’s no secret that we live in a world where digitisation dominates. All modern businesses use some form of technology to operate – whether that’s a website for online sales or a chip and pin device for taking card and digital payments.
This is because technology benefits businesses, with half of UK small businesses experiencing cost savings or increased profit from using the right tech. And this is being realised across the board. Over half of UK small businesses agree that technology will become more important for them over the next five years.
Being technologically literate is a must for modern businesses and by extension the levelling up agenda. Sadly, however, too often entrepreneurs and small business owners struggle to find the right digital tools for their businesses, or how to navigate their way through the plethora of choices available.
Nearly 4 in 10 businesses want to use more digital tools in their business, but don’t know which are right for them and are concerned that getting it wrong could impact their finances.
The Government and big businesses can support entrepreneurs in levelling up
Larger technology organisations have a duty and responsibility, to help smaller businesses access the appropriate digital tech to help manage this tricky period and future-proof their operations.
Last year we identified a significant risk that the UK’s small and micro businesses will miss out on an estimated £827 billion growth opportunity over the next five years if they are not supported to digitise.
To help, Mastercard has launched Strive UK – a social impact programme aimed at reaching over half a million micro and small UK businesses, empowering them to succeed in the digital economy through free guidance, tools, and personalised, one-to-one mentoring.
Working together with our partners – Enterprise Nation, Digital Boost and Be the Business – we hope to move the dial for hundreds of thousands of business owners, helping them level up and enabling more inclusive growth across the economy.
We strongly welcomed the Government’s Help to Grow digital scheme when it was launched, yet we know it is not a silver bullet. The smallest of businesses – those with fewer than five employees – are still not eligible to apply.
There is also limited guidance on how to spend the vouchers, posing another challenge for small business owners who are often the CEO, HR department, customer service team and Chief Financial Officer all in one.
Bolstering businesses’ digital and financial resilience
The Government must be proactive in tackling the areas where SMEs continue to struggle the most by bolstering their digital and financial resilience.
Departments and their agencies should lead by example by deploying digital payments innovation, including boosting options to facilitate rapid payment of invoices in its dealing with small businesses.
It should make greater use of e-invoicing, Faster Payments and procurement cards, and consider making them mandatory for all departments in the payment of invoices to businesses. Doing so will enable SMEs to get paid quicker and encourage the adoption of similar payment options in their day-today-day activity.
Finally, Government should consider how it can better work with the industry to widely rollout innovations as such the Request to Pay payment solution – a new, flexible way to settle bills – and how it can encourage larger billers to also offer this payment solution to small businesses.
By working together, Government and big businesses can support the entrepreneurial spirit that runs so strongly throughout the UK.
Expanding the Help to Grow scheme so more businesses can benefit needs to be considered, but Government and the business community also need to continue to address the other barriers that SMEs face, so the country’s entrepreneurs have the opportunity to level up and thrive. The need to step up and take action is more pressing than ever.
This piece was provided by Kelly Devine, Division President, UK & Ireland, Mastercard.