How Can Government Support Business Growth in the Uk

How Can presidency Support calling growing in the UK? Judging from study(ip) shopping centres and high streets, it is easy to adjudicate that the UK is dominated by large successful barteres. However, Office for matter Statistics figures (2008) coming into court that 89% of either UK enterprises hurl less than 10 employees and 98. 1% have less than 50 employees the real largest companies account for just 0. 4% of each UK stemma enterprises (Birchall, 2009). Although there ar several vantages of being a atomic firm, most businesses want to grow and this inspires the question What is business egress? LinkedIn (2012) defines business growth as an innovation that delivers solutions to customers while adding entertain both internally and externally to our processes as well as increasing customer value while increasing shekels. In less complex terms, a business is said to be growing when it gets a best surrender on its investment. In this essay, I will be discussing the airs the administration terminate support business growth. In doing this research, a question popped in my head, Why should the political sympathies support business growth? One of the major puzzles facing the UK currently is unemployment.Once a business starts growing, it is essential to hire much people to help power the development and ensure stability. As such, the problem of unemployment will be considerably reduced. Secondly, Stokes and Wilson (2006) have argued that in recent times, elflike firms have proved to be an abundant source of very originative ideas however, they lack resources to put them into practice without external assistance. They also highlighted the item that sensitive firms argon essential to compete with large companies by providing alternating(a) sources of supply thereby gamblinging an immeasurable role in the anti-monopoly policy.Insufficient finance is a major cause of business failure and this is superstar of the major hindrances encount ered by businesses in their pursuit of growth. Finance is critical for starting, maintaining and growing subtle and medium businesses whence, it is vital that both start-ups and existing businesses have access to the estimable range of debt and equity financing options ( subdivision for logical argument Innovation and Skills, 2010). Cameron (2011) in his savoir-faire about the role of small businesses expressed his shock at the way small and medium enterprises are blocked out of procurement and achievement opportunities.In applying for bank loans, a business is required to possess a create of collateral or guarantee to support the application. Unfortunately for most businesses, they do not have sufficient collateral to back the application. The political relation tin therefore set up schemes to help entrepreneurs obtain finance from fiscal institutions by agreeing to guarantee loans. For example, in 2011, Hong Kong launched the SME Loan batten Scheme which was aimed at h elping small and medium enterprises (SMEs) obtain loans from financial institutions and in unity year, there has been tremendous growth in several industries (SME Fund, 2012).In addition to guaranteeing loans, the UK disposal posterior also help firms or industries attract external investors or experts in specific fields private individuals and companies. This gouge be achieved by either providing certain incentives to the investors and experts who will not only provide the funds needed to run the business but possess the knowledge and expertise required to grow the business or creating a platform for entrepreneurs to hold their ideas to these investors. In 2005, the British Broadcasting Corporation, backed by the UK government launched a show, firedrakes Den (BBC, 2012).This was aimed at well-favoured entrepreneurs the opportunity to careen their businesses to five of the most wealthy business moguls in the UK. Also, in 2005, Mozambiques government solicited the Internat ional Finance Corporation (IFC) to help develop their tourism sector and in less than five years after, Mozambique has attracted over $33 million in investment and designated over 13,000 ha of land as sustainable tourism zones (IFC, 2012). The government can help the unemployed and single out start-up businesses of their own through special schemes.In 1999, the government recognised the need to further start-ups in mischiefd companies so the Phoenix Fund was set up (Open gathering, 2012). The major objective of this scheme was to get ahead investment in unused and growing businesses. However, the unemployed population are still being snub and some of them genuinely want to work but have met with one difficulty or anformer(a) (Open Forum, 2012). The government can help by creating enabling opportunities for people to set up their own businesses at home. They can also set up Enterprise Allowance Schemes which will deal as incentives to these entrepreneurs.Furthermore, the gove rnment can interfere with the free merchandise and pen failing businesses. However, there are two sides to this coin. On one hand, governments intervention through policies would result in a better controlled trading environment and can stabilise faltering economies. An example of this is the 2008 financial crises when the UK government stepped in to help the large banks and struggling auto definers. On the former(a) hand, governments interventions may result in inefficiency such as price floors e. g. EUs Common Agriculture Policy which created huge surpluses (excess butter to make a cube of butter with 125m sides) (Debate Org. 2012) Another way the UK government can support business growth is to lighten the burden of gross and administrative processes required to start up and run a business. The Bolton Committee suggested that measureation policies should reflect the governments encouragement of entrepreneurial activity and rectify the marketplaceability of small businesses i . e. improving the degree to which an asset can be traded in the market without affecting its price (Stokes and Wilson, 2006). The government responded to this suggestion by giving small firms the advantage of benefitting from lower corporation tax rates.For example, a troupe with profits from ? 50,000 to ? 300,000 has a tax rate of 19%. However, once profits increase above this range, they are liable to the full 30% tax rate (UK Legislation, 2012). Similar to all other businesses, yet the very small firms are responsible for health and safety on their premises for all workers and customers. For example, The Safety at Work puzzle out (1974) and the Offices, Shops and Railway Premises Act (1963) give employers thorough responsibilities ranging from machinery safety to even the temperature of the working environment.Another example is the harm Discrimination Act (1995) which requires employers to take steps to ensure disabled employees are not discriminated against. smooth firms h ave experienced major difficulties in sideline these regulations to the letter. The government can help here by reducing its requirements regarding very small firms and by encouraging their inspectors to increase their awareness of smaller firms interests (UK Legislation, 2012). The threesome way in which the government can support business growth is in the provision of instruction and advice.Of all the factors initiating growth, the most important is caboodle and the ability to be aware of chance opportunities (Gill, 1985). In 1993, the UK government launched what Stokes and Wilson (2006) cite to as a network of independent local business development and advice centres suggesting a range of services to the business community, designed to provoke the competitiveness of local companies. This network is known as bloodline Links. The government can develop this initiative by providing online nurture and services thereby, scope a larger range of businesses.However, Office for National Statistics (2008) show that 24% of SMEs lack online presence. Therefore, in addition to providing online information, the government has to encourage these companies to log on to the internet. Business owners and entrepreneurs tend to value advice from experienced business moguls. Therefore, the government can set up business mentoring organisations that will provide practical advice and contacts for other businesses, based on hands-on experience (Department for Business Innovation and Skills, 2010).In 1972, on the recommendation of the Bolton Committee, the Small Firms Service (SFS) was set up to provide information through a network of 13 Small Firms Centres (SFCs) however, this service jam-packed up in 1990 due to the irresponsibility and negligence of the management. In rancor of the failure of the service in the UK, other governments recognised that if these organisations were successful, the benefits cannot be over-empha sized (Open Forum, 2012). They therefore set up similar schemes e. g. he United States Small Business Administration, the Australian business services portal of the Department of Industry, Tourism and Resources and the Small Business Directorate in the Ministry of Economic Development in mod Zealand (LinkedIn, 2012). Business growth brings improved survival prospects through larger market shares, diversification into different markets and greater finance. It also brings an increased feeling of precondition and power. Most importantly, it enables a firm enjoy economies of scale. Wikipedia (2012) defines economies of scale as the live advantages that an enterprise obtains due to expansion.The common sources of economies of scale are purchase bulk buying of materials through long-term contracts, managerial increasing the specialisation of managers, financial obtaining lower-interest charges when borrowing from banks and having access to a greater range of financial instruments, marketing spreading the cost of advertising over a greater range of output in media market and technological taking advantage of returns to scale in the production function. In the 1990s during the Asian scotch crises, Tesco saw this as an opportunity to enter the market and once the economies started to recover, they emerged stronger.Today, they are the market leader in Thailand (Floyd, 2011). Whereas growth is encouraged, there are a number of possible problems arising from growth. Firstly, expansion brings pressure on a firms fluidness e. g. as a result of offering additional credit to encourage sales, and on its level of gearing. Also, although growth may have been planned expeditiously by managers, they may find that this growth makes the firms dissimilar functions or projects more difficult to co-ordinate and to control, and its communication procedures slower.In addition, there is no guarantee that what is popular in the UK market will give out evenly popular overseas, because of local and national differences ( e. g. due to culture). Control and co-ordination also become more difficult as a result of international expansion. A good example of when business growth has been a huge disadvantage to a company is General Motors Limited in the USA (Open Forum, 2012). In conclusion, the three ways in which the UK government can support business growth are by improving access to finance, making information and advice available to people and by lightening tax and administrative load.However, even though supporting business growth is essential, it is important that this growth be controlled because even though small firms make less profit than the larger ones and have low chances of surviving in the dynamic world of business, they offer a better and more flexible service to customers and their staff often benefit from high levels of motivation. They are also able to exploit their size and take advantage of the opportunities presented by diseconomies of scale suffered by large firms.Most importantly, they play an important role in ensuring the economy remains balanced. Reference angle of dip * Birchall, N. 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(1 985) Factors affecting the survival and growth of the smaller company.Hants Gower publication Company Limited * IFC (2012) Helping Attract Investment in Mozambiques Tourism Sector Online. Available at http//goo. gl/wkZqZ (Accessed on thirtieth October 2012) * LinkedIn (2012) Business Growth Online. Available at http//www. linkedin. com (Accessed on 1st November 2012) * Office for National Statistics (2008) UK Business Statistics Online. Available at http//nationalstatistics. gov. uk (Accessed on 12th October 2012) * Open Forum (2011) Why the Government should help Young Entrepreneurs start business Online. Available at http//goo. l/uYwiZ (Accessed on 13th October 2012) * SME Fund (2012) SME Loan Guarantee Scheme Online. Available at http//www. smefund. tid. gov. hk/english/sgs/sgs_objective. html (Accessed on 30th October 2012) * Stokes, D. and Wilson, N. (2006) Small Business Management Entrepreneurship. London Thomson Learning * UK Legislation (2012) transaction and Tax-related Laws Online. Available at http//www. legislation. gov. uk (Accessed on 2nd November 2012) * Wikipedia (2012) Economies of scale Online. Available at http//www. wikipedia. com (Accessed on 4th November 2012)