The UK government are coming under increasing pressure to make business support schemes accessible to SMEs. Today, I was invited to give my opinion on BBC Radio 4’s Today programme. I’m sure many of you will be having a similar experience. Together, we can work to ensure we can all come out of lockdown with businesses our staff can return to.
While on holiday in the Summer of 2013, I had an idea for a new business. Piece by piece, I built my company. I enabled my first customer, a Spanish publisher, to make a healthy profit. I also made enough profit to lay the foundation for a healthy, profitable and enjoyable business.
Seven years later, I have a fantastic business partner, and a company employing ten staff. Last year was a milestone year for us, winning four awards:
Most Promising New Business from the Kent Invicta Chamber of Commerce
Creative and Digital Agency of the Year from the Kent Business Awards
Business Woman of the Year from the Kent Business Awards
Exporter of the Year at the Kent Excellence in Business Awards (KEiBA)
Business was good, but challenging, as our continued growth depended on much forward planning and innovation to get us through Brexit. Our turnover reached £1m, and we felt secure and strong.
When businesses were put into lockdown and Boris Johnson and Rishi Sunak laid out their programme of support for businesses, I felt encouraged and confident that my business’s future was in good hands. They promised we would be supported ‘at any cost’ because protecting the economy required supporting all businesses – big and small.
And yet, despite the huge amount of support being offered by the government, people like me have been left out.
Our company revenue has dropped dramatically as key clients have suspended their marketing programmes. We have therefore had to furlough seven staff. This has been a helpful scheme that will allow us to bring our team together again when the lockdown is lifted.
Clare Foltynie, speaking on Radio 4’s Today programme
However, my partner and I continue to work hard to ensure we have a strong business for our staff to come back to. We are:
- putting extra unpaid work and time into our remaining clients to keep them going
- working with clients on what they should and will be doing after lockdown
- looking for new business opportunities
- putting our own plans in place for January 2021.
As company directors, we pay ourselves a small PAYE salary made up at varying times by dividend payments. This allows us to keep our company finances flexible. In months that bring in less revenue, we can ensure we pay our staff and bills by delaying payment of our own salaries.
Other than putting all costs, and the health of the business first and foremost in our decision making, we are not unlike our staff. We are not wealthy company directors who show up occasionally at board meetings. We have modest salaries, mortgages, car loans and dependent young families. We might pay for most of the beers on a Friday night, but that is where our differences stop.
Why then have we been left out of all the government support schemes so far made available to businesses? We do not qualify for the Job Retention Scheme because we are company directors, paying ourselves by dividends. If we could furlough ourselves, we wouldn’t want to because we are driven to keep our business going for our staff to come back to. Since lockdown, there has been no profit in the company and so we cannot pay ourselves, but need to continue running the company to ensure its survival.
We do not qualify for the Self-Employed Income Support Scheme because we are directors of limited companies.
Reports so far are that government loans have only been granted to <1% of businesses who need them.
There are five million small businesses in the UK like us. Today, the Federation of Small Businesses has received 500 emails to a special hotline setup for businesses to highlight their own cases where there is no government support. The Institute of Directors reports 300,000 signatories to a petition calling for more support for people running their own companies.
I feel sure that this is not what Boris Johnson and Rishi Sunak intended. SMEs like us are the very companies who are small and flexible enough to innovate quickly and respond to change, driving our businesses forward to help the economy bounce back after the lockdown is lifted.
I understand that much of the government support requires complex planning and is technically and practically challenging to implement. But, even the promise of support over the coming months will make a huge difference. My business has cash in the bank for a month. Our clients will take time to return to us and return of revenue to pre-lockdown levels won’t come immediately. Building the business back will take many months, and the bills won’t go away, we will still have mounted up rent and taxes to pay. This is when we are going to need most support. If furloughing our staff is to have economic value for my business, the government must look after the people who are keeping the business going.
We have paid corporation tax on profits, and income tax on dividends. I am not arguing for anything more than furloughed staff – 80% of salary with a cap of £2,500 – to allow us to keep our business going.
Please share with businesses who need more government support so we can highlight this gap.