Helping the self-employed combat the rising cost of living

Helping the self-employed combat the rising cost of living

In this guest blog for NEN, Todd Mitchell from Enterprise Exchange discusses some of the issues faced by the self-employed and how they can combat those challenges.

Small business owners are struggling to adjust to soaring operating costs and the drop in consumer confidence.

Inflation in the UK reached its highest recorded level in decades, with UK Parliament noting that the consumer prices index (CPI) has risen as much as 5.4%, making it noticeably more difficult for the average UK citizen to purchase goods and services. Consumer confidence has dropped to its lowest level in 13 months in February of 2022 according to Trading Economics, in direct response to heightened inflation.

Enterprise supporters are small businesses too!

Within the small to medium enterprise (SME) category are enterprise support providers, who provide self-employment training to local entrepreneurs and offer practical support to the self-employed. Self-employment training is often funded by local government and public sector bodies, but investment varies widely across different regions of the UK.

What self-employed workers and those who support them can agree on, is that wherever they are based, they are not afforded the same provisions as those in full-time employment.

Feeling exposed

The loss of the New Enterprise Allowance was a significant blow to startup businesses and enterprise supporters alike. The current Universal Credit system provides the newly self-employed with 12 months in which the ‘minimum income floor’ does not apply. This means they will be afforded the full rate of financial support whilst they are ‘newly gainfully self-employed’ but when we consider this period as a test-trading period, 12 months starts to look less than sufficient.

When it comes to accessing loan and grant offerings, additional barriers occur for entrepreneurs with poor credit scores, or other groups who don’t fit neatly into the tick-box criteria.

Self-employed individuals and small business owners still receive no government support when it comes to sick pay or annual leave, leaving them in a more exposed financial position.

The impact of the utilities price hike

In January of 2021, a joint YouGov and Mettle survey estimated that the self-employment market accounted for £125 billion towards the recovery of the UK economy after the Covid-19 pandemic. Given the role that we are playing in the bounce back of the UK economy, it’s increasingly evident that self-employed workers deserve more respect and more support.

The cost of utilities and materials for small businesses have always been a point of contention, as prices continue to soar. Recent difficulties have resulted from a combination of the European energy shortage, Covid-19 pandemic, and subsequent production and logistical issues. The overall increased costs for any product or service have a knock-on effect: the everyday customer begins to spend less with small businesses, instead opting for larger entities that can weather the inflation more readily thanks to their size.

To demonstrate how far-reaching this issue has become, the British Chambers of Commerce (BCC) released survey results in January that highlighted three quarters of businesses are increasing their prices to meet surging costs. Moreover, 62% of those surveyed reported that gas and electric bills are a crucial issue bolstered by 52% also recognising material costs as problematic.

We need a more robust and inclusive support system in the UK for SMEs and the self-employed to lessen future disruptions.

Our vision for the future

Widespread support can be achieved by offering a government-backed nationwide skills-based programme. This would benefit those beginning their self-employment journey but would also provide help for small business owners in maintaining their standing enterprises.

Enterprise Exchange have won multiple NEN Awards, most recently at the 2021 Awards ceremony for ‘Innovation in Enterprise’

A trade union for the self-employed would help this sector of labour to come together, to better inform policy and the provision of support for self-employment training providers and sole-traders.

It is essential that enterprise support is available for: those beginning their self-employment journey, small business owners maintaining their standing enterprises, and extant businesses as they pivot their focus in response to the ever-changing landscape of the economy.

So how can we help ourselves?

Like any small business, Enterprise Exchange have felt the tightening strings of the economy, so we have taken several proactive steps which other small businesses could take inspiration from:

1. Consistently innovate and develop your processes

The use of virtual reality software has revolutionised the way we approach our self-employment education programmes alongside our interactive augmented reality workbook.

2. Invest in collaborations with likeminded organisations

We have also been lucky enough to work in coordination with several universities in addition to working closely with the Innovate UK organisation to attain business-led innovation.

3. Find a voice to champion your cause

Being part National Enterprise Network has also allowed Enterprise Exchange to have some input on government policy affecting self-employment. We recommend joining a network that lobbies on behalf of its members and represents your views to stakeholders and policy makers in your sector.

Only by combining business flexibility, adaptation and collaboration can we achieve a unified sector where support for small business is acknowledged and achieved – Phil Ashford, Director, Enterprise Exchange

This blog was taken from an article written by Todd Mitchell, Marketing & Communications Coordinator at Enterprise Exchange. You can read the full article on their website.