When the previous administration announced its plans to increase National Insurance, the SME sector was up in arms. Many small business owners could not understand why the government, which had always said that it recognized the importance of an enterprise led recovery, was choosing to introduce a tax which would make hiring more employees much more expensive.

At the time, the Conservative party slammed Alistair Darling’s plans. Therefore, once the coalition government came into power, the majority of the SME sector expected them to overturn the previous government’s plans to increased National Insurance.

While they did not reduce National Insurance for businesses in the south and south west they did devise a policy whereby recently formed regional companies would be eligible for a ‘National Insurance Holiday’.

Christopher Thomas, spokesperson for the FSB, comments; “This new legislation which entitles businesses which completed the company formation process on or after June 2010 a National Insurance break on their first ten employees, will provide a welcome boost both to company formation and enterprise.”

According to the CBI – Confederation of British Industry – companies in the UK are still finding it tough to maintain profitability. This is a consequence of many market factors; for example the rise of aggressive discounting throughout the recession and the increase in the number of consumers who are going on line to research and make purchases. As a result companies are under increasing pressure to be competitive on price and compete with online e-tailers.

The report also found that business owners in the UK expect that their companies will experience a further drop in profitability as the UK continues on its path to economic recovery.

We speak to Lorraine Jones, founder and CEO of online retail emporium ‘Jessie James’; “The fact is the recession changed our entire business proposition. It was no longer enough to have a presence on the high street – we were competing with online retailers who could afford to reduce their margins as they did not have the same overheads as us. So it was a case of if you can’t beat them, join them.

“I find it astonishing that in the current market context some businesses still do not have a website.”

One of the first steps to keeping a handle of your cash flow is establishing which costs are fixed – i.e. costs which will be incurred regardless of how profitable your company is – and costs which are flexible – i.e. paying suppliers and marketing and advertising.

Most small business owners identify the cost of their business premises as a fixed cost and while in essence this is true, according to a recent report; in the current economic climate there is scope to negotiate better deals on leases and rent.

The report, conducted by British Commercial Property Forum, found that recently formed companies are increasing negotiating shorter leases and better monthly rental rates.

The survey, which asked over two thousand respondents how they felt about the current economic context revealed that fifty five per cent said the felt more optimistic about the future than they did a year ago.

While over forty per cent said that would be more comfortable making a high ticket purchase now than in 2009.

James Lockhart, spokesperson for the Forum of Private Enterprise, comments; “Consumer confidence was one of the main casualties of the recession and its decline had a massive impact on almost all sectors, but the most badly affected was undoubtedly the Retail Sector. The fact that it has improved, makes a double dip recession an unlikely reality.”

As a result the government introduced the ‘Late Payment Charter’ which encouraged business to commit to paying their suppliers on time. However, on the whole, feedback from the SME sector was largely negative; they felt it failed to address the problem properly and that more needed to be done to protect small businesses and recently formed companies from business that didn’t pay.

A year on from the ‘Late Payment Charter’ is seems that little progress has been made; over sixty per cent of businesses feel that late payment poses a serious threat to their company’s future , while over thirty per cent say that they feel they spend a larger proportion of their time chasing payment.

Yet, a recent report from credit agency J.P Partners reveals that more and more companies are failing to chase bad debt as they feel they may compromise their business relationships and future work.

In a complete contradiction of Chancellor George Osborne’s claim that the Emergency Budget represented ‘progressive economics’ , the Institute for Fiscal Studies claimed that the budget actually targeted lower income families, by cutting welfare and child benefits.

Shadow chancellor Alistair Darling was keen to support the IFS findings, claiming that the ‘Emergency Budget’ was merely an ‘Old-fashioned Tory budget with a liberal spin.’ Darling’s comment comments will undoubtedly harm the Liberal Democrats, who have been keen to appear as though they are staying true to their ideological liberalism since the coalition was announced.

Last night the government claimed that they were sticking by their ‘Emergency Budget’ while Mr. Clegg commented that he refused to take advice from the previous administration who consistently failed to achieve their objective of reducing child poverty.

When the budget was first announced, there was widespread criticism from the SME sector who felt it failed to address the barriers to company formation or current lending situation which are the real challenges facing enterprise in the UK.

The survey, conducted by online consultancy RGM, found that of the two thousand people asked – aged between eighteen and thirty felt that their business idea would be incredibly successful if only they could raise the finance needed to get it started.

While nearly ninety per cent of all those asked said that they plan to form a company and give their idea a go in the next year, ten per cent said they were put off by the current economic climate and would wait until the economy improves to start their business.

A recent report conducted by private investment company ‘Peter Marshall Consultancy’, found that over ninety per cent of all the four hundred small business owners asked said that they have found accessing finance exceptionally difficult.

Oscar Smith, spokesperson for ‘P.M Consultancy’, comments; “ While is seems that the government has finally understood that, as the biggest employer in the UK, the SME sector is integral to the UK’s economic recovery, they still need to address the fact that companies are still finding accessing finance to fund growth or indeed company formation, incredibly challenging.”

The same survey found that while companies are finding obtaining finance from banks challenging, over eighty per cent of respondents stated that they found starting a business and the company formation process easier than ever.

However, it did contain some concessions for companies outside the south and south west ; offering them a reduction in National Insurance for their first ten employees. This, combined with the fact that the government has pledged to completely change the way in which regional enterprise is handled by local government indicates that David Cameron’s coalition has placed supporting regional enterprise firmly on the political agenda – and it’s not a moment to soon, if the findings of a recent report are to believed.

A recent report, conducted by the Form of Scottish Retail, shows that on average Scottish retail revenue is down by almost two per cent compared with last year’s result – this is the lowest figures have been down in over a decade.

This report should ring alarm bells for the government, who have pledged to support and stimulate enterprise in the UK

This has been seen as an extremely positive move by the small business sector. Martin Cooper, spokesperson for the Forum of Private Enterprise, comments;

“The fact that, in the current economic context, small businesses are having an extremely tough time when apply for finance is well documented. However, until now, I don’t think that the broader implications of the lending situation had been fully realised; the SME sector is the biggest employer in the UK and therefore if the banks continue to restrict access to finance, they are compromising the country’s already fragile economic recovery.

While feedback on setting banks lending targets has been extremely positive from the SME sector, the same cannot be said for the banking sector. In an interview with The Sunday Times, several banking bosses have said that if the government were to set targets, the strategy would not be welcomed and many would refuse to join the scheme.