One small step for a business means a leap for growth

IT IS encouraging that UK unemployment has registered its first fall since last spring. However, it is still at alarming levels, with long-term unemployment at its worst for 16 years, according to the Office for National Statistics.

In these difficult times, it’s vital not to underestimate the power of small business. If a quarter of the UK’s 4.5m sole traders and small businesses took on one other employee, we could make a huge impact on UK unemployment.

Youth unemployment alone remains above the 1m mark on some measures, breached last autumn for the first time since comparable records began in 1992. As the government acknowledges, if this problem is not tackled, we risk creating a lost generation.

The recent announcement of 1,000 new job opportunities from a global firm like Nissan is encouraging. But Britain’s nation of sole traders can also make a real impact by hiring just one employee.

There is a huge pool of young, ambitious graduates that are ready to work, as well as skilled tradespeople and enthusiastic minds that, at the moment, equal lost potential. So why are small businesses so reluctant to take that leap and recruit new talent?

To find out, Intuit polled 500 sole traders and small businesses. We found that 91 per cent of sole traders would not consider hiring an employee in the next 12 months, with more than a quarter of respondents blaming the administrative burden of bureaucracy and paperwork.

Take Priya Lakhani, chief executive and founder of Masala Masala. She says her company isn’t hiring right now because “we need flexibility and we haven’t really got the time or the funding to go through employment and accounting regulations”.

What is striking, though, is that more than half of the small businesses we surveyed admitted that employing someone would help them grow their business. So what is holding them back?

Employers and economists agree that less regulation and cutting national insurance contributions would encourage small businesses to take more people. But it is also vital we address the perceived administrative hurdles.

Mentoring could play an important role, to help sole traders concerned about the bureaucracy of taking on staff. Getting a better handle on financial management would also help to give small business owners confidence that they can afford to take on an employee. Some 65 per cent of small businesses still rely on manual processes to manage their money and more use could be made of tools to simplify administrative tasks like payroll.

We need the UK’s small businesses to create jobs as they grow, whether by taking on new recruits, apprentices or flexible staff. Let’s help them to take the leap and go for growth.

Pernille Bruun-Jensen is UK managing director of Intuit. The report One Giant Leap: The Vital First Step to Becoming an Employer is online at: