SUPPORTING SMALL FIRMS IN WALES
Last week, the Cross-Party Group on Small Shops at the National Assembly for Wales released a report of its “Supporting Entrepreneurship” inquiry which had been established to examine how the Welsh Government and local authorities could help entrepreneurs and small businesses to grow.
With many studies into entrepreneurial behaviour focusing predominantly on knowledge-based firms in growing sectors, this study is to be welcomed for focusing on the needs of your ‘every-day’ entrepreneur in Wales and his/her requirements to develop their business.
More relevantly, it makes a number of recommendations which the Welsh Government should consider at a time when it is re-examining its own business support policies towards entrepreneurs.
For example, given the importance of training, it suggests better communication of apprenticeship funding and support for small employers to train more apprentices and, in terms of future skills, a higher profile approach by the Welsh Government towards employer engagement with schools to inspire the next generation of entrepreneurs.
In terms of infrastructure, it backs the Welsh Government’s objectives to offer fast reliable broadband to every property in Wales but sounds a warning that there needs to be a greater consideration of the impact of disruptive innovation such as online retailing on local communities across Wales.
However, its main recommendations relate to three key areas – business rates, regulation and access to finance - which many small businesses will welcome.
As this column has noted on many occasions, business rates can be a major barrier to the further development of small firms if the burden is too high. With business rates now being devolved to the Welsh Government, the report is right to suggest that rather than just being seen as a vehicle for raising money, the business rate system should be used to enhance and incentivise business investment from entrepreneurs in the Welsh economy.
This could include rewarding investment by providing time limited exemptions for new store developments or letting businesses set their capital investment against their rates bills.
Government regulation is another burden that falls disproportionately on smaller businesses and the cross-party group proposes that Welsh Government should introduce a new ‘Entrepreneurs Test’ to encompass all impact assessments for business regulation.
Whilst the Small Business, Enterprise and Employment Act 2015 and Enterprise Act 2016 introduced a new ‘Business Impact Target’ impact assessment aiming to ensure businesses are not overburdened by excessive regulation from UK Government bodies, it suggest that the Welsh Government should go further and introduce a new ‘Entrepreneurs Test’ to encompass all impact assessments for business regulation.
This would consider whether the regulation creates barriers to market entry for new entrepreneurs; what provisions have been made to help entrepreneurs understand and navigate the new regulation; and how has the impact on entrepreneurs been considered during the policy making process. In doing so, it would show that Wales is ‘open for business’ and could give the economy a competitive advantage relative to other parts of the UK.
Finally, and perhaps most importantly, it addresses concern that more needs to be done to increase awareness of how businesses can use the business finance market to drive business growth.
Various reports have highlighted that access to finance is one of the key concerns for those looking to set up in business. This is particularly the case in high streets up and down the country where changing consumer demands means that businesses are seeking to invest in attracting and retaining shoppers being tempted by online offers.
As a result, the Welsh Government should have a greater focus on communicating existing finance options, including through the new Development Bank of Wales. In particular, the Development Bank’s interaction with Business Wales as the ‘shop front’ for business support in Wales should be seamless and, more importantly, more visible to entrepreneurs. In addition, there needs to be greater effort in informing and educating small businesses as to the right finance for their needs, especially given the growth in a thriving alternative finance market.
Therefore, with the growing importance of entrepreneurs to the Welsh economy in terms of creating jobs and prosperity, this independent report from representatives of all political parties in Wales is to be welcomed, especially for its practical recommendations on a range of issues.
Given this, entrepreneurs will hope that the Welsh Government will take heed of these suggestions for policy and, more importantly, will continue to put business at the heart of everything it does.