For many consumers and company owners alike, the days of using a cheque as a payment method are long gone. Most of the retail sector has long since abandoned it and most consumers wouldn’t think of using a cheque at the checkout and consequently the government are now planning to terminate the cheque as a method of payment entirely within eight years. But what impact will this have on the SME and company formation sector if any?

Well, according to a recent report by online POS experts ‘ProSave’, getting rid of cheques altogether will have the most impact on the SME sector and for companies just recently formed. The report revealed that in the current climate, cheques are most used as a method of payment by trades people, consultants and small companies.

The report also found that companies who rely on the custom from a demographic will also be badly affected. As, despite the fact that recent IAB figures state that the 40-65 demographic is the second fastest growing online user base, still, almost seventy per cent of people aged over sixty still do not have a computer at home.

While there are those who will be negatively affected by the end of the cheque, overall it is a positive move for enterprise as making payments becomes more efficient.

While it has been reported that the manufacturing sector has enjoyed the best trading conditions it has experienced in the last decade, as a consequence of increase global consumer confidence, that latest figures from the Office of National Statistics reveals that manufacturing output actually fell in the month of May.

Harvey Bridges, chief economic advisor to the Federation of Engineers and Manufacturers, comments; “While we did experience an increase in consumer demand over the last three months industrial output has not increased to the expected levels. This is a consequence of a number of factors; the impact of a weak pound on exports and the fact that many industry experts overestimated the impact destocking would have on the industry.”

Among the most solvent sectors of manufacturing are the machinery, technical equipment and interestingly, the car manufacturing sector. It was thought by many that once the government scrapped its support schemes that the motoring sector would suffer indefinitely, however, according to these figures this is not the case.

Bridges concludes; “Overall it seems that our economic recovery remains anemic and if we are to remain buoyant the government must come up with some strategies to stimulate spending.”

When it was first announced that David Cameron would form a Lib-Con Coalition government, the small business and company formation sector took a collective concerned breath.

Many business owners felt that a government with such polarized ideological differences, would be to pre-occupied by internal power struggles , to give the company formation and small business sector the strong policy and direction needed to consolidate the country’s financial future.

However, when the Queen opened parliament last month and announced the coalition’s plans to address the budget deficit and prioritize enterprise, many SME owners became more positive about David Cameron’s coalition. Yet as the small business sector eagerly awaits the Emergency Budget, the media has been full of claims that the budget will function around an ill-advised VAT rise and taxation increases, both of which pose a significant threat to business and enterprise in the UK.

According to a recent report from the Federation of Small Business, just fewer than thirty per cent of all their members feel that emergency budget will have a positive impact on the small business and company formation sector.

When the previous administration appointed Lord Alan Sugar as ‘New Business Tsar’ widespread controversy ensued.
Tasked with advising the government on all matters to do with small business and enterprise, Lord Alan immediately alienated the people he was meant to be representing, by claiming that struggling small business owners were ‘whiners’.

Lord Sugar has again been making a number of controversial comments since David Cameron’s Coalition began their term in office. The Apprentice star slammed Cameron’s plans to increase Capital Gains Tax, explaining that this policy will have a devastating impact on company formation and small business alike.

Lord Sugar was not placated by the fact that the government have promised to exclude all ‘entrepreneurial activities’ from the tax increase. In fact he claimed that the government’s refusal to give more details on what will be defined as an ‘entrepreneurial activity’ was at best misleading and at worse damaging.

Lord Sugar isn’t the only business expert who has expressed concerns about the impact raising Capital Gains Tax will have on enterprise in the UK. Earlier this month the British Chamber of Commerce also published a statement outlining their fears that raising CGT will stunt the UK’s already fragile economic recovery.

While England football fan are well accustomed to having their hopes raised only to be disappointed, for many small business and company formation owners, England’s crushing defeat at the hands of Germany this weekend will have been made even worse, by the fact that it will undoubtedly have a negative effect on consumer spending.

While Tescos and other high street supermarket chains announced record sales last weekend, small business also experienced an uplifted in consumer spending as a consequence of the World Cup.

Jeff Hayes, founder and CEO of online homeware store Direct Homes, comments; “Since the first games of the World Cup we noticed uplift in consumer spending, especially in outdoor items such as barbeques and garden furniture. While many people may say that that is the result of seasonality, I think it is more to do with the atmosphere generated by the World Cup.”

“People have had a tough year economically and everyone is feeling the pinch. The World Cup gave them something to focus on and – initially – the hope of something to celebrate. My company will definitely feel the impact of England going out at such an early stage.”

Since it has been in power, David Cameron’s coalition government have announced a number of landmark plans, designed to address the budget deficit.

Some have been unpopular with the small business and company formation sector – increasing VAT and Capital Gains Tax – while some have been received positively – National Insurance provisions and the reduction of Corporation tax. Regardless of what you think about the actual policies, it must be said that they are clear examples of strong government, indicating that any fears the electorate had of a coalition being unable to devise strong and decisive policy was unfounded.

Now the Emergency Budget has been announced the government are switching their attention on how best to deal with the UK’s aging population. In a landmark move to help ensure the skills and expertise of people over the age of 60 remain within the workforce; the government have unveiled plans to get rid of the uniform retirement of sixty five.

According to a spokesperson from the Chartered Institute of Personnel and Development, these new plans will redefine retirement and provide a much needed boost to the economy.

This week saw David Cameron’s coalition government announce its first budget.
Devised with the primary objective of addressing the huge budget deficit the UK economy faces, has George Osborne been ‘tough, but fair’ or are the much feared tax increases he proposes a step to far, especially at the point in the UK’s fragile economic recovery? We ask leading economist Ben Connolly for his thoughts on the coalition’s Emergency Budget;

“ First of all, I think it is important to mention that Osborne’s ‘Emergency Budget’ , did not contain any nasty little surprises for small businesses or the company formation sector; the rise in VAT was widely feared though hugely anticipated, as was the increase in Capital Gains Tax. However, while these policies may have been expected, in my opinion, their implementation may have a long term impact on the UK’s economic recovery, that may surprise even Mr. Osborne.”

“The rise in VAT by just 2 per cent, may, on the surface, seem like an unfortunate but necessary consequence of attempting to address the country’s massive debt. However, in the current economic climate, small businesses face two main challenges; low consumer confidence and the challenge of maintaining a good cash flow. I fear the rise in VAT will make both these challenges much worse.”

“Many small business owners felt that when Cameron announced his plans to cut public spending by £10 billion, the onus would fall on the private sector to stimulate recovery. Therefore, it was hoped that the emergency budget would make adequate provisions to support the small business sector. While, the rise in VAT and Capital Gains Tax may have left some company formation owner disheartened, it is important to remember that the budget did contain some measures devised to help the SME.”

“Corporation Tax has been reduced by one per cent and Osborne’s plan to make company formations outside of the south and south west exempt from paying the first five thousand pounds in National Insurance for their first ten employees, will no doubt help struggling companies and provide a much needed boost to employment in those areas.”

Initially, the SME and company formation sector were concerned that a Coalition government would result in a weak executive paralyzed by ideological differences and unable to make the difficult decisions needed to address the severe economic issues this country faces.

However , when the Queen opened parliament and gave a speech outlining David Cameron’s coalition’s plans to address the budget deficit immediately via a number of pro active measures, including cutting public spending by six billion, many small business and company formation owners were impressed by the strength of this new government.

Yet now, a month after the speech and in the context of proposed VAT increased and spiraling unemployment many small business owners are concerned about the impact of Cameron’s aggressive economic policy. One such person is Philip Morris, chief economist at the Forum of Small Business and Enterprise. He comments;

“When you compare the UK’s economic recovery to other world super powers its weak at best. Yes output is up, but only marginally. Cameron’s economic policy is strong in the fact that it has completely prioritized addressing the budget deficit over any political differences he and his Liberal Democrat- conservative coalition may have.”

“However, in the short term it will result in stunting the UK’s economic growth due to a loss of jobs.”

The retail sector has encountered many challenges since the beginning of 2010; first came the increase in VAT and then some of the worse weather conditions this country has ever seen. Both of which resulted in a decrease in consumer confidence and subsequently consumer spending and left company formation owners in the retail sector under immense pressure.

However, the last month’s improvement in weather and anticipation of the World Cup has lead to an increase in the amount of money consumers are spending on the high street.

According to the Office of National Statistics, retail revenue improved by almost five per cent in May compared to the previous months activity.

James Drake, spokesperson for the ONI , comments ; “ While at the begging of the year customers were understandably concerned about their economic future , now , in the context of a new government, the imminent World Cup and improved weather customers have begun spending again”

“As the World Cup approaches retailers should be poised to make the most of the opportunity of increased consumer confidence. “

You’ve been thinking about it for years, spent hours upon hours thinking about how your dream could become a reality and now it is finally here. No, we’re not talking about the imminent World Cup we’re referring to company formation.

For most entrepreneurs, forming their own company has been a lifelong dream and once they have achieved it, many want their staff to feel as passionate and committed to their company as they do, only to be disappointed by the reality that they don’t.

Indeed, while many business owners are burning the midnight oil worrying about cash flow and avoiding having to make redundancies, some employees will be more concerned with planning their next sick day. But when it comes to World-cup related absences, have small business got a plan?

Well according to a recent report – which found that over seventy per cent of small businesses have no plans to implement a strategy to deal with staff World-cup informed sick days – apparently not. However, while it is a good idea to have some form of policy when dealing with this situation, it is also easy for bosses to only concentrate on the negative impact the world cup could have on their company’s profitability. But what about the positive?

In the absence of financial incentives, the World Cup can be used by companies as a great way of boosting staff morale. Showing your team that you are willing to join in with the celebration as long as the work still gets done is a great team building strategy.