One of the biggest lessons I’ve learned while networking with small and micro businesses is that policymakers so often speak about small businesses rather than with them. I’ve met thousands of business owners across the UK on a weekly basis. The conversations I have are rarely about tax rises in isolation – they’re about finding the right customers, managing cash flow, navigating regulation, recruiting the right people and simply finding enough hours in the day. If the government spent more time listening in local business communities, policy would shape what microbusinesses really need and become more practical and far more effective.
The UK’s economy isn’t built solely by household names and high-growth scale-ups. It’s built every day by hundreds of thousands of people running businesses from high streets, industrial estates, spare bedrooms and kitchen tables. Until policy reflects that reality, the government will continue to solve problems that many micro businesses simply don’t have, while overlooking the ones they face every day.
95% of all small businesses in the UK are classified as micro businesses, and micro businesses generate around 25% of the UK’s GDP, serving as an important foundation of the private sector.
The perception of micro businesses —
One of the major problems is that policy often treats small to medium businesses as if they are the same, but this obviously isn’t the case. Running a business by yourself with no employees is different to someone running a business with seven employees and is fundamentally different from someone running an SME with 100 employees.
In a micro business, the owner is usually juggling many roles – finances, HR, marketing, sales and customer service. Every new regulation that comes in across these different parts of a business may seem small to lawmakers, but the responsibility can fall in one big swoop on a small business owner.
For a larger organisation, there will be someone whose job it is to understand and implement it. For a micro business, it usually means the owner will spend their whole evening trying to work out what they need to do, taking up valuable time and resources.
Why cash flow matters to microbusinesses —
Government policies and support are also often tied to profitability, but micro businesses live and die by cash flow. Late payments, VAT bills and rising employment-related costs create pressure long before a business becomes unprofitable. Many viable businesses fail simply because they run out of cash.
While the Government’s Small Business Protection Bill, introduced this year to crack down on late payments, is a major step forward, 60-day payment terms are still far too long for many micro businesses and can mean the difference between running for another month or not.
Imagine an employee being told they had to wait two months for their salary; it would be unacceptable. Yet small businesses are expected to continue paying wages, suppliers and bills while waiting for money they are already owed.
Not every business wants to scale —
Another assumption is that every business wants to scale at a rapid pace; in reality, many don’t. There are business owners who deliberately build sustainable companies that support their families while they employ a small team and contribute to their local community. Success shouldn’t be measured by only headcount and turnover.
Hiring your first employee is often harder than hiring the tenth, because then an entrepreneur is responsible for someone else’s livelihood while also navigating payroll, pensions, employment law and HR. Thresholds around VAT, business rates and employment regulation can also create disproportionate jumps in complexity for the smallest businesses.
What microbusinesses really need —
Micro business owners are good at adapting to change; what they struggle with is constant uncertainty. When rules change repeatedly, or new regulations come in without enough notice, it becomes harder to make decisions about investing, hiring or growing. Confidence and trust in consistency is usually more valuable than another difficult-to-navigate grant scheme.
Support needs to be accessible for businesses who have very little capacity to do complicated application processes for grants and programmes. The businesses these grants are often intended for simply don’t have the time to complete them. For a micro business, saving an owner five hours of administration can be more valuable than another scheme they don’t have time to access.
Listen to local business communities —
Micro businesses need community. They need relationships, recommendations, partnerships and customer loyalty in order to thrive. I’ve seen first-hand how much value can come from connecting business owners with each other. The UK government could achieve more by strengthening these local communities and listening to the businesses already operating within them.
Instead of asking how many grants were awarded or how many schemes were launched, perhaps policymakers should be asking different questions: How many hours of administration were removed? How much faster do small businesses get paid? How much easier is it to hire the first employee? And how much confidence do business owners have to invest?
Micro businesses don’t need policymakers to have all the answers, but they need them to understand the reality they are trying to regulate. Until government starts listening to the people actually running these businesses, there will always be a gap between what looks like good policy on paper and what actually works in reality.
Simon George is the co-founder of Business Buzz, one of the UK’s fastest-growing business networking communities, helping thousands of entrepreneurs, business owners and professionals build meaningful connections and grow their businesses.
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