Business121 Small Business Newsletter #32

In this week's Business121:

1. Small businesses to be hit hardest by new compulsory pension
2. Steering through the early years – Tips for Start-Up Survival
3. IT pros more likely to suffer from stress says new survey
4. The best way to make networking work
5. Small businesses vote Conservative MEP as their champion
6. Two new Enterprise Capital Funds to help plug the equity gap
7. Tackle Tax Avoidance through System Reform, says IoD
8. Company liquidations up 17% on 2005

Small businesses to be hit hardest by new compulsory pension

What is this Government thinking?

Not content with hitting businesses with endless new legislation and red tape it now seems that employers will be forced to contribute to a new National Pensions Savings Scheme (NPSS).

The employee can opt-out of the NPSS but it's believed that sheer apathy means that most will remain in the scheme.

The white paper is due out later this week but a leak to the Guardian indicates that employers will be compelled to contribute an additional 3% of an employee's salary into the NPSS. The employee will contribute 4% and the Government will provide 1% in the form of tax relief.

The white paper admits that this will cost UK businesses an extra £2.6 billion every year!

The Guardian leak also reveals that the Government recognises that forcing employers to pay into employees' pensions will hit small businesses hardest;

The white paper states, "The £2.6bn additional employers' contributions is based on a rate of participation, or opting into such schemes, of about two-thirds of staff, and represents a 0.6% rise in their labour costs; for firms with fewer than 50 staff, the additional contributions would be closer to a 0.9% rise in labour costs."

And that's just the direct cost of contributing. The cost of administering the scheme will hit small businesses even harder. Every extra hour spent dealing with the NPSS is an hour less that can be spent on actually running the business.

But don't worry there's a 'cunning plan'

But the good news is that the white paper has very helpfully identified two ways that all small businesses can negate these extra costs. It suggests that the extra costs can be handed on through;

1) HIGHER PRICES or
2) LOWER FUTURE WAGE INCREASES

Well there we are then! I hadn't realised running a business and making a profit was that simple.

This statement is so utterly laughable, it's reminiscent of one of Baldrick's "cunning plans".

It's an insult to every small business owner and entrepreneur. Do they really believe that a business can simply raise prices overnight and not lose any sales? Or that you can simply decide to stop next year's wage increase and not lose valuable staff?

If they do believe that it's this simple, they really have no comprehension of what it takes to run a small business in a competitive market. The reality is that forcing small businesses to pay into employee's pensions will act as another barrier to employment and growth.

If you'd like to find out more about the forthcoming National Pensions Savings Scheme have a read of these articles from the Guardian and Telegraph online.

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Steering through the early years – Tips for Start-Up Survival
As a start-up business, there are a few essential ingredients you’ll need to consider right away. These will help you portray yourself as a solid, reliable operation that others will want to do business with;
http://snipurl.com/_StartUp_Survival

IT pros more likely to suffer from stress says new survey
IT experts are more likely to suffer from stress than any other professional, according to a new survey. A staggering 97 per cent of people working in IT claim to find their life at work stressful on a daily basis;
http://snipurl.com/_IT_Pros_stress

The best way to make networking work
As we've previously highlighted in Business121, networking can be a great way to to promote your business. But many people mis-use networking and therefore miss out on the real opportunity it offers. Avoid falling into this common trap, here's the best way to make networking work;
http://snipurl.com/Make_networking_work

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SMALL BUSINESS NEWS
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Small businesses vote Conservative MEP as their champion
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Conservative MEP, Malcolm Harbour has been voted the UK's Small Business Friendly MP/MEP.
http://snipurl.com/_BizFriendly_MEP

Two new Enterprise Capital Funds to help plug the equity gap
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Two new Enterprise Capital Funds (ECFs) are to be created in an attempt to help small businesses trapped in the equity gap;
http://snipurl.com/_enterprise_funds

Tackle Tax Avoidance through System Reform, says IoD
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Comprehensive reform of the tax system is the only effective solution to tax avoidance, business leaders claimed this week;
http://snipurl.com/_Reform_tax_system

Company liquidations up 17% on 2005
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Figures released this month by the Insolvency Service show a significant rise in company liquidations over the past year;
http://snipurl.com/_Liquidations_rise

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(c) Business121.co.uk 2006