In 2023, government statistics indicated some 8.7m people were employed by 5.3m micro-firms in the UK, with a total turnover of over £923Bn.
These firms typically employ no more than 10 people and have turnover of no more than £2m per annum.
The implementation of new government policies or changes in tax legislation can have a profound impact on their operation and continuity.
We spoke to three micro-business owners from Sutton, south London, about their business prospects and expectations following the General Election in July 2024.
Dave Chudasama, 46, who runs the Repair Shop, a shoe repair and key cutting business, was pessimistic about the General Election and the democratic process.
“I’m not going to vote. Voting is a disguise to make people think they have a say when they don’t,” he said.
Chudasama cited the existing tax burden on micro firms as a significant concern as he tries to make a living for this family.
He stated: “Whoever is in office they are going to take me for every penny despite needing feed my children and put a roof over my head. When you are paying out more than you provide for your family is becomes an issue. The tax system is unbalanced.”
He pointed to a homeless encampment opposite his shop, in his view there are “countless people walking about being unproductive,” suggesting welfare benefits were perhaps too generous.
Even if he wanted to employ staff to grow his business, Chudasama thinks the cost is prohibitive due to the need to pay employee benefits such as holiday and sick pay as well as employer national insurance contributions.
This view was shared by Kardar Challenger, 60, owns and operates Challenger Events Catering, a business with sales over £500,000 and a payroll of five employees.
Challenger was sceptical about the impact of a likely Labour government. He said: “The Labour Party is not the party of the working man as it was the 1970’s. New Labour are a semi-Conservative party.”
He said it was “inevitable” a Labour government would increase tax but in the absence of a “clear picture” on specific policies, he was unable to quantify the impact on his business.
He highlighted other cost driver which may hurt his business. “My main concern is the impact of inflation on raw materials and interest rates on profitability,” he said.
Given the macro-economic pressures on his business, Challenger reminisced about the 1970s when access to loan capital was secured through a close relationship with the local bank manager.
“Nowadays if you want a loan, the computer says ‘no’ and the computer is in Glasgow,” he lamented.
Despite voting in favour of Brexit, Challenger was sanguine about the outcome as EU citizens were now harder to employ. “British workers demand more money, so there’s been no gain,” he said.
Udaya Hetti, 54, who owns Caffe Kiko in the St.Nicholas shopping centre, was cautious about the future.
He turns over £250,000 per annum and employees four full time staff supplemented with part time workers.
His business depends on footfall and people having sufficient disposal income to eat out and socialise.
Hetti was convinced taxes would rise under the next government and new taxes would be created.
If new car taxes such as a pay per mile road tax and new congestion charges were levied, the café owner would be concerned.
He said: “People will not come and spend in a coffee shop but spend on groceries instead,” which would undermine the long- term viability of his business.
