Problems facing high street businesses are well-documented. It seems like every week, headlines highlight the number of empty shops, retail job losses or another high-profile chain's going out of business. Making up more than 99 per cent of all businesses across the UK, small firms are in the midst of this.
Problems facing high street businesses are well-documented. It seems like every week, headlines highlight the number of empty shops, retail job losses or another high-profile chain's going out of business. Making up more than 99 per cent of all businesses across the UK, small firms are in the midst of this.
These hardworking small retailers continue to report one of the lowest confidence levels of any sector, and up against spiralling business rates, high rents and online competition, it's easy to see why. Expensive town centre parking charges and poor infrastructure are sending customers away from high streets to large out-of-town retailers, and the loss of bank branches and cash points from our high streets all add to the everyday challenges small firms come up against. Small businesses are at the heart of our communities, providing jobs, bespoke products and a personal service, yet despite being key to the success of a town centre, many are finding it too difficult to stay afloat. However, we should not be resigned to defeat.
The Federation of Small Businesses (FSB) is campaigning to make changes to some of the barriers that small firms are facing. Of course, there won't be one silver bullet to save the high street, but FSB's ongoing campaigning on high streets – and the publication of our High Streets Hub last year – has demonstrated that there is much that can be done to alleviate the challenges. These include the burdens of tax, parking and planning policy.
Business rates burden
One of the largest burdens disproportionately affecting small firms is the outdated business rates system, which, with its roots in the Elizabethan poor laws, is stuck in the past. Its fundamental principle – that property value is a reasonable substitution for the occupant's wealth – is no longer fit for purpose. A lot of businesses rent their spaces so don't benefit when their shops and offices rise in value. Yet as rents continue to rise, they are still expected to pay increasing business rates. The tax is not linked in any way to fluctuations in trade or income. At the same time, multimillion-pound e-commerce giants operating out of remote warehouses are seeing their rates fall, demonstrating just how ludicrous this regressive system is.
Over the long term, FSB is continuing to lobby for an overhaul of the unfair, regressive tax, which hits firms before they've had the chance to make their first pound of turnover, let alone profit. But with the overall bill expected to rise to more than £30billion this year, more urgent relief is needed. At last autumn's Budget, we welcomed the government's pledge to cut business rates bills by one-third for retail properties with a rateable value of under £51,000. The two-year fund comes into play this April and will apply to the vast majority of small retailers, as well as cafés, restaurants and bars. Business rates are a huge weight on small firms, so it's right that this extra funding has been pledged. But to have an impact, there cannot be any delay in it reaching those that need it. It must apply immediately to bills that cover the period from 1 April.
Parking and potholes Local roads and infrastructure are the arteries that feed our town centres and high streets, yet too many of them are in a state of disrepair and lack adequate parking facilities. Smaller businesses rely on these roads to access goods, customers and employees. With our research showing that 93 per cent of small businesses rate their cars as crucial for business, FSB has been calling for increased funding for local roads, as well as more free town centre parking to improve congestion hot spots. Therefore, we were pleased to hear the government would allocate £420million to local authorities in 2018/19 to tackle potholes and repair damaged roads. Parking remains a huge issue for local small businesses, and while high parking charges and fines raise thousands of pounds for local councils, it puts small town centre retailers in jeopardy. FSB will continue to work with authorities, both at local and national level, to come up with strategies that work for everyone.
Bricks vs. clicks
Despite the pressures hanging over small firms, we know small businesses are resilient. Small firms are not tied in with layers of bureaucracy, which means they can react quickly to consumer demand and often offer more interesting and bespoke products to shoppers. While big retail giants might struggle to keep up, small shops can be nimble. Some forecasts are predicting a rise in independents in the coming years, despite the apparent doom and gloom.
Latest figures from the Local Data Company show growth in some areas. Small firms are often savvy about offering customers the best service in store. The prevalence of online review sites, including Trust Pilot and Trip Advisor, means that customer experience is king. It means that high street businesses can offer an unequivocal face-to-face customer experience, which online cannot. While FSB offers bricks businesses advice in expanding, members also receive help on moving into clicks. A high street and online presence are not mutually exclusive, and many businesses use both a shopfront and website. But our research has shown that a quarter of business owners in England lack confidence in their basic digital skills, and more than a fifth believe a lack of basic digital skills among their staff is holding them back from increasing their digital and online presences.
We know that embracing digital technology can help businesses in every sector to be more productive. Firms risk being left behind unless they have the skills to take advantage of technology to remain competitive and responsive to their customers. If we can harness the digital potential of small firms, we stand a real chance of creating more world-beating businesses and boosting growth. Reimagining high streets Aside from policy changes that could make a difference to a small business' bank balances, we must start reimagining our town centres and thinking about them differently.
With huge competition from large online brands and a shift in consumer habits, the way we shop has changed, while high streets have largely remained the same. While we're not certain what high streets of the future might look like, a healthy high street should be diverse and not just focused on shopping. There should be a mix of not only restaurants, cafés and pubs but also services like hairdressers, gyms, shared workspaces for the self-employed, with cultural venues and community-based amenities. Also announced at the Budget was the Future High Streets Fund, which gives an opportunity for councils to think carefully about ways to improve their town centres and bid for funding to put those plans in place.
Talking to their local small businesses is a great place to start for local authorities. At the heart of their communities, these small firms will allow them to harness some innovative ideas that will improve the public realm and create vibrant hubs in their city, town and village centres. If burdens can be reduced and opportunities provided, then small businesses can help give our high streets a new and exciting future. It will take central government, councils, community groups, businesses and consumers to come up with real solutions. Small business owners and the self-employed tend to be some of the most innovative people in society, and while the challenges in this new era do present difficulties, it is up to us all as the small business community, supported by organisations like FSB, to work together to find new ways to navigate and to help the high street thrive.
About Federation of Small Businesses
As the UK's business support group, FSB is the voice of the UK's small businesses and the self-employed. Established more than 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that's led by its members for its members. As the UK's leading business campaigner, FSB is focused on delivering change that supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in the government. Each year, FSB also runs the UK's Celebrating Small Business Awards. More information is available at fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.
