Despite sky-high levels of hysteria in the run-up to, and immediately after, the Brexit vote, the doomsday scenario for British businesses simply hasn’t materialised. Entrepreneurs should look on the bright side.
In recent weeks, small business owners in particular have reason to feel buoyant. The Bank of England’s decision to cut interest rates to 0.25 per cent should see benefits passed down to business owners in the form of cheaper loans.
Then there was the publication of the Competition and Markets Authority’s (CMA) investigation into the retail banking sector, which should prompt high street lenders and challenger banks to create a more transparent environment in which small business owners can shop around for the best funding deals.
What’s more, the appointment of Margot James – an entrepreneur herself – as small business minister is a further commitment showing just how serious the UK government is to the sensitivities of the needs of its vital small business community.
These measures should send a giant, neon-lit message to would-be entrepreneurs that the UK is open for business.
And why shouldn’t the UK continue to fly the flag for foreign companies? Some of the UK’s greatest business success stories have come from the dreams of overseas entrepreneurs.
From Sir Stelios Haji-Ioannou, founder of Easyjet, and one of the leading proponents of cheap air travel, to Tesco founder and son of Polish immigrant Jack Cohen, some of the most iconic UK brands originated from foreign investment.
This lineage of global business success isn’t the only thing that has drawn overseas entrepreneurs like myself to these shores.
According to data from the World Bank in 2015, the UK remains the easiest place to set up and run a business in Europe – taking business owners, on average, just 13 days to launch a company. This is staggering if you consider the European average is 32 days.
Recent research from the Operation for Economic Co-Operation and Development (OECD) also noted that the UK has the least barriers to entrepreneurship in the world, is second in the world for Product Market Regulation behind Australia, and has the third least barriers to trade and investment in the world.
The fact that this environment continues to act as such an effective incubator for start-ups is born out in the figures: 2015 saw 608,100 new startups, – a growth of 4.6 per cent on 2014, according to Companies House.
What’s more, initial post-Brexit statistics indicate that uncertainty has done little to dampen this appetite for overseas entrepreneurs entering the UK market. In fact, the data shows that the referendum vote might have acted as a spur to new registrations from overseas.
The Company Warehouse, a company formation agent, noted that between 30th June and 4th July 2016, 13.1 per cent of directors forming new UK companies gave an EU country as their nationality. This compares with an average rate of 11.5 per cent in the period from March 2015 to April 2016.
Barriers to entry for foreign businesses are low, and are spelled out clearly on the government portal. However, if you’re looking to set up shop here, it’s worth considering two significant pieces of regulation for small businesses over the last year.
First off, the law on UK workplace pensions has changed, meaning that every employer must put certain staff into a pension scheme and contribute towards it. This auto-enrolment applies to startups too – if you’re a new employer with PAYE income first payable between 1 October 2016 and June 2017, you will be required to ‘stage’ (setup a workplace pension) by January 2018.
Fines can escalate from an initial £400 fixed penalty notice, so it’s worth anticipating contribution costs well ahead of your staging date to avoid any untoward fees.
As of April this year, businesses will have to pay the National Living Wage to staff members over the age of 25. Set at £7.20 per hour now, business owners should anticipate this rising to £9 by 2020. SMEs looking to stay ahead of these costs should increase their employee’s salaries by 45p a year until 2020.
This new red tape should be a minor consideration for entrepreneurs eyeing up the UK as a place to do business – the UK’s reputation as an environment for innovation far outweighs that.
For my business Chototel, using the UK as a launch pad for global expansion was a no-brainer. We develop affordable accommodation in areas of rapid urbanisation around the world, and having access to investment is vital for us to scale quickly.
In all of its recent regulatory commitments, the UK’s business community – despite suffering from post-Brexit uncertainty – has made a pledge to continue nurturing this kind of innovation.
By Rhea Silva