Small companies avoid international growth and keep it local
The country’s smallest companies are largely avoiding international expansion and keeping their ambitions local, according to new research.
Despite changes to workers’ rights, the majority of micro-enterprises – those with fewer than ten full-time employees – say they are positive about growing their businesses over the next two years.
Many small businesses are looking closer to home, rather than focusing on national or even international expansion.
A survey by Zempler Bank shows that 27 percent of companies prefer local or regional growth, while 17 percent expect expansion in the United Kingdom.
The research shows that companies with between six and ten employees are more likely to pursue national growth.
Only 12 percent of small businesses said their main goal was to expand internationally.
Going for growth: Small companies choose local expansion over international expansion
It will be good news for the chancellor, who has her sights set on an aggressive growth agenda to boost the economy against the backdrop of rising government bond yields that threaten tax hikes or spending cuts.
And while companies have ambitious goals, including launching new products and services, concerns about growth are increasing.
Of the companies that expect modest growth (54 percent) or have no ambition to grow (24 percent), more than a quarter say that economic headwinds are the biggest obstacle.
This rises to 35 percent for both retail and hair and beauty companies, while only 17 percent of professional services firms – including financial and legal firms – are concerned about the economy.
Rich Wagner, CEO of Zempler Bank, said: ‘Our research into micro-enterprises and sole traders provides a fascinating insight into the hopes and fears of Britain’s smallest businesses. The majority are optimistic and pragmatic and share concerns about the economy and their family life.
‘It’s remarkably refreshing and highlights that work isn’t always about money, but sometimes about improving your business and doing something new.’
A recent survey by the Federation of Small Businesses found that 32 percent of respondents plan to reduce their workforce as a result of the Employment Rights Bill.
More than 90 percent of members said they were concerned about the bill, with many citing fears of being taken to court over changes to unfair dismissal legislation.
Concerns about running a business seep into other elements of their lives, with 66 percent expressing concerns about the impact on their mental health, according to Zempler Bank.
Of those companies expecting significant growth, 40 percent highlighted continued demand for products and services, while 27 percent said they could increase prices for customers.
Looking ahead to the next tax year, some small businesses could be rocked by increases in statutory sick and parental benefits, although most will be protected from changes to National Insurance contributions.
Wagner added: ‘While sole traders and some micro-businesses are protected from some of the coming tax changes, these changes will still hit smaller businesses the hardest.
‘Smaller companies are often unable to absorb these additional costs or pass them on to customers in the way that larger companies can. Those operating on thin margins might understandably start to wonder if it’s worth it.
‘That said, I am continually impressed by the positivity and resilience of British entrepreneurs… I hope we continue to see that positivity and that more people will see the value of starting their own business.’
SAVE MONEY, EARN MONEY
1% cashback
1% cashback
About debit card payments. Maximum €15 p/m*
Utility bills
Utility bills
Find out if you can save with a fixed rate
Free stock offer
Free stock offer
No account fees and free stock trading
4.5% 1-year Isa
4.5% 1-year Isa
Hampshire Trust with Hargreaves Lansdown
Sipp reimbursement offer
Sipp reimbursement offer
Get six months free on a Sipp
Affiliate links: If you purchase a product, This is Money may earn a commission. These deals have been chosen by our editors because we believe they are worth highlighting. This does not affect our editorial independence. *Chase: Cashback available for the first year. Exceptions apply. 18+, UK residents.