How Can Government Support Business Growth in the Uk

How roll in the hay Government Support telephone line Growth in the UK? Judging from major shopping centres and high streets, it is well-fixed to conclude that the UK is dominated by large successful melodic phrasees. However, Office for content Statistics figures (2008) show that 89% of every(prenominal) UK enterprises have less than 10 employees and 98. 1% have less than 50 employees the very largest companies account for honourable 0. 4% of wholly UK byplay enterprises (Birchall, 2009). Although there are several advantages of being a tenuous firm, virtually businesses want to grow and this inspires the question What is business issue? LinkedIn (2012) defines business issue as an innovation that delivers solutions to customers period adding measure out both internally and externally to our processes as well as change magnitude customer value while increasing net profit. In less complex terms, a business is said to be growing when it gets a better return on its in vestment. In this essay, I result be discussing the slipway the political relation can support business result. In doing this research, a question popped in my head, Why should the giving medication support business fruit? One of the major problems facing the UK currently is unemployment.Once a business get starteds growing, it is infixed to hire more people to garter power the development and tally stability. As such, the problem of unemployment will be considerably reduced. Secondly, Stokes and Wilson (2006) have argued that in recent times, small firms have proved to be an rampant source of very inventive ideas however, they miss resources to put them into practice without external assistance. They also highlighted the circumstance that small firms are essential to compete with larger companies by providing alternating sources of supply thereby acting an immeasurable role in the anti-monopoly policy.Insufficient finance is a major cause of business failure and this is hotshot of the major hindrances encountered by businesses in their pursuit of growth. Finance is critical for starting, maintaining and growing small and medium businesses therefore, it is snappy that both start-ups and existing businesses have access to the full range of debt and equity financing options (Department for dividing line understructure and Skills, 2010). Cameron (2011) in his speech about the role of small businesses expressed his shock at the way small and medium enterprises are blocked out of procurement and acquisition opportunities.In applying for bank loans, a business is call for to possess a form of collateral or guarantee to support the application. Unfortunately for most businesses, they do not have sufficient collateral to back the application. The authorities can therefore stage up schemes to financial aid entrepreneurs obtain finance from financial institutions by agreeing to guarantee loans. For example, in 2011, Hong Kong launched the SME loanw ord Guarantee dodge which was aimed at helping small and medium enterprises (SMEs) obtain loans from financial institutions and in one year, there has been dangerous growth in several industries (SME Fund, 2012).In addition to guaranteeing loans, the UK government can also help firms or industries puff external investors or experts in specific fields private individuals and companies. This can be achieved by all providing certain incentives to the investors and experts who will not only provide the funds needed to run the business tho possess the knowledge and expertise required to grow the business or creating a platform for entrepreneurs to commit their ideas to these investors. In 2005, the British Broadcasting Corporation, backed by the UK government launched a show, firedrakes hideout (BBC, 2012).This was aimed at giving entrepreneurs the opportunity to pitch their businesses to five of the most wealthy business moguls in the UK. Also, in 2005, Mozambiques government so licited the International 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 disadvantaged start-up businesses of their birth through special schemes.In 1999, the government recognised the need to encourage start-ups in disadvantaged companies so the phoenix Fund was set up (Open Forum, 2012). The major objective of this scheme was to encourage investment in brand-new and growing businesses. However, the unemployed population are still being ignored and some of them genuinely want to work but have met with one difficulty or an separate (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 Al pocket-sizedance Schemes which will serve as incentives to th ese entrepreneurs.Furthermore, the government can interfere with the release market place and save 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 automakers. On the early(a) hand, governments interventions may result in inefficiency such as price floors e. g. EUs Common husbandry 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 taxation and administrative processes required to start up and run a business. The Bolton Committee suggested that taxation policies should reflect the governments encouragement of entrepreneurial activity and improve the mark etability 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 raft tax rates.For example, a company with profits from ? 50,000 to ? 300,000 has a tax rate of 19%. However, once profits gain above this range, they are liable to the full 30% tax rate (UK Legislation, 2012). Similar to all other businesses, even the very small firms are responsible for health and safety on their premise for all workers and customers. For example, The Safety at Work Act (1974) and the Offices, Shops and Railway Premises Act (1963) give employers innate responsibilities ranging from machinery safety to even the temperature of the working environment.Another example is the Disability Discrimination Act (1995) which requires employers to experience steps to ensure disabled employees are not discriminated against. Small firms have experienced major difficulties in following 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 cognisantness of smaller firms interests (UK Legislation, 2012). The third way in which the government can support business growth is in the provision of discipline and advice.Of all the factors initiating growth, the most important is luck and the ability to be aware of chance opportunities (Gill, 1985). In 1993, the UK government launched what Stokes and Wilson (2006) refer to as a network of independent local business information and advice centres offering a range of suffices to the business community, designed to enhance the competitiveness of local companies. This network is known as Business Links. The government can develop this initiative by providing online information and military service of processs thereby, reaching 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 insertion and Skills, 2010).In 1972, on the recommendation of the Bolton Committee, the Small Firms operate (SFS) was set up to provide information through a network of 13 Small Firms Centres (SFCs) however, this service packed up in 1990 due to the irresponsibility and negligence of the management. In spite of the failure of the service in the UK, other governments recognised that if these organisations were successful, the benefits cannot be over-emphasized (Open Forum, 2012). They therefore set up similar schemes e. g. he unify 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 New Zealand (LinkedIn, 2012). Business growth brings improved option prospects through larger market shares, diversification into different markets and greater finance. It also brings an increased feeling of place and power. Most importantly, it enables a firm enjoy economies of carapace. Wikipedia (2012) defines economies of scale as the cost advantages that an enterprise obtains due to expanding upon.The common sources of economies of scale are purchasing bulk buying of materials through long-term contracts, managerial increasing the specialization of managers, financial obtaining lower-interest charges when borrowing from banks and having access to a greater range of financial instruments, marketing dispersal the cost of advertising over a greater range of output in media market and technical taking advantage of returns to scale in the production function. In the 1990s during the Asian economic 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 efficiently by managers, they may find that this growth makes the firms various 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 universal in the UK market will become equally popular overseas, because of local and national differences (e. g. due to culture). authorisation and co-ordination also become more difficult as a result of international expansion. A costly example of when business growth has been a huge disadvantage to a company is General Motors restrain 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 accompaniment 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 economic system remains balanced. Reference List * Birchall, N. (2009) Survival of the smallest, Business Review Journal, (Sept 2009), pp. 5-7 * British Broadcasting Corporation (BBC) (2012) Dragons Den Online. Available at http//www. bbc. co. uk/programmes/p01009mj (Accessed on 13th October 2012) * Cameron, D. (2011) Is the Government serious about supporting small business? Online. Available at http//goo. gl/l2rBl (Accessed on 13th October 2012) * Debate org. 2012) Should the government intervene with the unacquainted(p) market and save failing businesses? Online. Available at http//www. debate. org/opinions (Accessed on 1st November 2012) * Department for Business Innovation and Skills (2010) Backing small business Online. Available at http//goo. gl/9gGe9 (Accessed on 13th October 2012) * Drucker, P. (1985) Innovation and Entrepreneurship. London Heinemann * Floyd, D. (2011) revisal AS A2 Bu siness Studies. London Letts Educational Ltd. * Gill, J. (1985) Factors affecting the survival and growth of the smaller company.Hants Gower Publishing telephoner Limited * IFC (2012) Helping Attract Investment in Mozambiques Tourism Sector Online. Available at http//goo. gl/wkZqZ (Accessed on 30th 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 Learn ing * UK Legislation (2012) Employment 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)