This is an honest assessment as to why I worry for the next few years in the UK and I wrote this article as a way of showing my frustration, and sharing a business perspective of the challenges small business owners are currently facing.
I stood outside our unit today talking to a few of the other businesses owners on our estate , and it all started with the following issue -
Everyone was talking about the new terms of conditions of our rental agreements for our industrial units and the huge rental hikes (ranging from 28% to 80%) along with new terms and conditions which include £350 legal fees for an off the shelf rental contract (they created using a word document), three months rent upfront and an Electrical test certificate , basically Blaenau Gwent County Council have pushed up the rent , charged the business owners for signing their name to a contract they created using a word document, and forced us into spending hundreds of pounds to get someone to tell us what we know “their isn't anything wrong with the electrics”.
Now I know what your thinking “Well you can all afford it” but the problem is this is death of a thousand cuts, it's one issue on top of 4 years of other issues being forced on us, in normal times it would mean some small changes to pay for it, but with the current issues facing businesses, it's just one too many issues to find a solution for.
So what are these other issues (Some of them are personal to our industry) ?
- Covid - Yes it affected us all, but it has damaged small businesses to a huge and on-going extent and most of us were until recently seeing some light at the end of the tunne.
- Price sensitive customers - Pre Covid people were happy to spend the 8% more for a plant based plastic free product (this is the extra cost that plant based materials cost compared to petrol based materials), but now a large number of these businesses have gone back to plastics, because it's not just 8% more, it's about 30% more ( see below) and this is with us reducing our profit margin from 60% to less than 30%., we could of followed Canada, New Zealand etc and chosen to legislate to drive people away from plastics to plant based alternative, but the UK Government has actually done the opposite, in fact it's is predicted that because of policies like this, we will produce more petrol based plastics, but recycle at the same levels , ( a truly awful own goal).
3. Material Increases - The cost of materials has gone from 10% to as much as 30% , that alone is a huge issue for businesses like ours, but we could of mitgated this by reducing our profit margin and streamlining our business, if we didn't have the other stuff to deal with.
4. Plastic Tax - The last Government in their wisdow thought “ The rest of the world is supporting the plant based industry, why don't we drive it out of business” , because this tax means if we don't put plastics in our products , we have to pay the tax, I know insane and this has meant , more and more businesses are going back to plastics that harm the environment along with people's health just to survive, and businesses like ours that provide solutions to the problem of single use plastics are leaving the UK.
5. Plastic Ban - This policy is equally as bad as the plastic tax and is just as poorly thought out, what's banned isn't the issue, it's why it's banned that doesn't make sense, until recently you couldn't sell a wooden fork to a home customer, yet companies like Poundland were openly selling them because no one understood the law, including the people enforcing it.
6. Windsor Framework - Selling to Northern Ireland was simple, now it's so complex, no one knows whether to sell to Northern Ireland, we have suspended selling to Northern Ireland until we understand the new rules.
7. An Post - Not a UK Government issue, but still an important issue if like us you sold to Ireland, if a business sends something to Ireland, it will nearly always be rejected for no CN22 form ( custom declaration) even when it is on the box , we even went to the effort of making certain it was right next to the address label and still it comes back as no CN22, so sadly we no longer sell to Ireland.
8. Extended Producer Responsibility - This potential could of been a good way of creating full adoption of environmentally positive packaging, but instead you now have to pay for an extra cost for the disposal of any packaging regardless of the harm it creates ( yes you are still also expected to pay this as part of your Council Tax)
I have often heard repeated that failing businesses should be allowed to go to the wall, and although I agree if a business idea doesn't work , then it should be closed, but it isn't failing businesses closing, it's is until recently highly profitable businesses.
I obviously know a lot of business people and honestly a large majority of them are talking about throwing the towel in, because while the public sector gets huge wage increases, most of the business are reducing wages , reducing profit margins, cutting investment and reducing headcount just to survive, in fact as the MD, I haven't paid myself in 9 months while doing all the later (not here to elicit symphany, but just to give a perspective).
I know what most people are thinking get out the violin, but honestly I wrote this because I just don't think people ( especially Government employees) are aware of how bad things are in the private sector, it's why so many companies in our sector have either been taken over by foreign companies who have moved production moved outside of the UK and the businesses that haven't sold up , have taken the decision to relocate to survive (or are in the process of doing it), in fact we are looking at our options and haven't ruled out relocating outside of the UK just to guarantee our long term survival..
Why this matter to everyone is more than just less jobs, it means that less and less people are going to pay for these huge increases that Starmer rubber stamped in wage increases (£9 billion so far) , so where does that £9 billion come from, well it isn't going to be business, large business have holding companies that help them to avoid paying their fair share of tax, small businesses don't have the luxury of off shoring ( and in our case, won't) and this is why so many are talking about handing the keys back.
Another point to add is until recently I worked as a volunteer Business Advisor for the excellent Digital Boost (if you are starting a business I would recommend it for free help and advice) but I had to stop volunteering as a business mentor as I should be spreading a positive message but where do I find a postive in all of this, when the inevitable question comes “ Would you recommend starting a business”, as I have to honestly say , it's stress, worry and your always the last to get paid , so if you want stability, I can't recommend it.
So what can we all do about it?
Well firstly we need to make our Politicians aware of the damage they are doing, they are rubber stamping legislation they just don't understand as they are blissfully unaware of the damage they are doing, so tell your local MP that you want them to look into these insane taxes.
You can also buy local , support your local businesses while they are still here, thinking about buying from Amazon, find a local business and buy it from them (this alone would make a huge difference to small businesses, as Amazon, Etsy, eBay etc fees are huge) , in fact when you order a takeaway , go direct this can save them as much as 50% for your local takeaway.
What happens if things stay the same?
There are currently 5.5 million small businesses in the UK (down 500,000 since Covid) that generate £2.8 trillion of revenue and at least 48% of all taxes raised, so without our small businesses we would have to find another £600 billion.
Does this mean The Pure Option is in trouble?
When we set this company up , we set it up with honesty and transparency in mind and we have published our turnover on our website, so if you read the information pages on our website you will be aware that out of the last 5 years we have made a loss on 4 of the years, so for survival we have had to make some radical changes.
We have reduced our head count by 75%, reduced our profit margin, found new materials in order to minimise or avoid these destructive taxes, cut all non essential spending including marketing, reduced customer discounts, eliminated free shipping, reduced our storage facilities, abandoned our plans to open production faciltiies, temporarily suspended our international expansion program, stopped investing in equipment and research, reduced product ranges and a large number of other changes too boring to mention and this is just to survive the next few years.
These radical steps have at least pushed us back into the black,
The Pure Option has turned into a company that is as lean as it can be and still continue to operate ( we are now at the point there is nothing left to cut) , but a number of other businesses I spoke to aren't able to make such radical changes and are talking about shutting up shop.
I wrote this to be as honest as I can be and make people aware of the issues facing small businesses because once we are gone, we are gone, we all miss Woolworths ( I accept it was a large business but everyone remembers Woolies) but it's too late for Woolies, so supporting your small businesses is crucial and along with a new buy local mindset and a less destructive UK Government we may be around for many years to come.
On a personal note , I hope we are, I want to make a difference to the UK , our community and our employees but I can't do this while trying to survive the UK Government.
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