SMEs are driving value into our economy
If an alien were to pick up a broadsheet today he/she/it would be led to believe that the UK is a country of big businesses only. Off shoring tax, corporation tax, pensions, public sector pay – these are the issues that grab headlines with tedious regularity. But the reality is very different.
We have 4.8 million private firms in the UK, and 99.9% of those are small to medium-sized businesses, and the most are micro businesses. And the people involved in those businesses understand, perhaps more so than some employees in big businesses, that work and reward must be closely linked, that creating economic value is difficult, that customers are king, and that red tape and taxes are a nightmare.
But it can be difficult to ascertain the real value that small and medium-sized businesses really bring to the economy. Public perception can be that any value goes straight into the owners’ pockets. Ascertaining this value was the subject of a recent report, produced by PwC and The Prelude Group, that Moneypenny was delighted to take part in. It looks at seven high growth and successful entrepreneurial businesses to consider their overall tax contributions, and makes interesting reading. The figures remind us that by creating jobs and value added, entrepreneurial businesses always generate good tax receipts, directly and indirectly:
- None of the firms featured existed just a few years ago, and between us we now employ 1,219 people in total.
- PwC calculates that 44 per cent of the gross value added created over the last five years across the seven gazelles was distributed to employees.
- The amount retained or distributed to owners was just 15 per cent, while the value distributed to government in taxes borne (such as corporation tax and business rates) and collected (national insurance, income tax, Vat) amounts to 41 per cent of gross valued added.
- The seven firms generated a total tax contribution of £104.2m over the last five years.
- One of the firms featured hands 30 per cent of its turnover to HMRC; another collects £15,400 per employee in PAYE tax.
To see the full report go to http://www.preludegroup.co.uk/resources/Unsung-heroes-of-business1.pdf
So this report reminds us, yet again, that we need to do all that we can to encourage and support the small and medium-sized businesses who drive value into our economy and make such a significant contribution to the public finances of the UK. Headlines might be about big business but it is small business that will get us out of this current financial mess.
Rachel Clacher is the co-founder of Moneypenny, the UK’s leading telephone answering service. In 2000, Rachel and her brother Ed Reeves pooled their convictions about customer service and teamwork – and Moneypenny began. Today, Moneypenny’s strength lies in its extraordinary people and a passion to exceeding expectations. The exceptional calibre of Moneypenny’s team and the technology that supports them has been recognised by a Queen’s Award for Enterprise and Innovation and being nominated by the Sunday Times as one of the Best 100 Places to Work. 08000 199 944.
Author: Rachel Clacher is the co-founder of Moneypenny, the UK’s leading telephone answering service. In 2000, Rachel and her brother Ed Reeves pooled their convictions about customer service and teamwork – and Moneypenny began. More