The Shorthand – are four-day weeks on the horizon?

Welcome to this week's edition of The Shorthand, your weekly digest of the top news stories that affect small businesses in the UK! Here, we break down the stories you may have missed during the week, detailing what they’re all about and, more importantly, why you should care.

And all that in under 5 minutes.

Go on, put the kettle on and we’ll have you caught up with the most pressing business news stories of the week by the time you’ve finished a cup of tea.

1. Biggest ever 4-day work week trial begins

What’s happening here?

Working 80% of the time for 100% of your salary – sounds too good to be true? Well, 3,300 workers around the UK are starting a six month pilot scheme this week in which they will work four days a week while maintaining their full, five-day week salary.

Organised by 4 Day Week Global in partnership with the thinktank Autonomy, the trial aims to utilise the 100:80:100 model, whereby workers receive 100% of their pay, work 80% of their usual hours and aim for 100% productivity.

Previous 4-day week trials, such as a long-term trial between 2015 and 2019 in Iceland, proved a major success, with productivity remaining unaffected or improved by the reduced work week.

Why should you care?

The issue of productivity is hugely important to small businesses and one that can make the difference between small firms sinking or swimming.

This pilot scheme aims to demonstrate that businesses can enjoy a double benefit from introducing a 4-day week. Employees will benefit from more time to rest, recuperate, develop themselves professionally and socialise and businesses benefit from having employees that are less stressed, more productive and more focused on their jobs.

Ed Siegel, the Chief Executive of Charity Bank (the first UK bank to take part in a 4-day week trial) commented:

The 20th-century concept of a five-day working week is no longer the best fit for 21st-century business. We believe that a four-day week will create a happier workforce and will have an equally positive impact on business productivity.

Should the results of the trial show that productivity increases and output is unchanged over the course of each week, then it could act as a blueprint for small businesses in the future.

2. The post-covid retail spending bubble has burst

What’s happening here?

As Covid restrictions eased in the summer of 2021, retailers in the UK experienced a surge in sales. However, analysis of year-on-year trends in shopping habits by the British Retail Consortium (BRC) has revealed this week that the post-Covid bubble of spending has now burst.

Worryingly, retail sales in May 2022 were down 1.1% compared to the same period in 2021, an even sharper decline than the 0.3% drop in April 2022 compared to a year previously.

Sales of smaller items, such as clothing and accessories have remained solid, but in the face of an escalating cost-of-living crisis, shoppers are avoiding bigger ticket items such as furniture and electronics.

Helen Dickinson, the chief executive of the BRC, said:

It is clear the post-pandemic spending bubble has burst, with retailers facing tougher trading conditions, falling consumer confidence, and soaring inflation impacting consumers' spending power.

According to the BRC, the post-Covid consumer spending bubble has burst.

Why should you care?

This news is of immediate concern for small businesses operating in the retail sector, especially selling bigger ticket items or more luxury lines. The data suggests that shoppers are less inclined now to spend their disposable cash on retail than they were a year ago.

More specifically, shoppers simply have less disposable income to spend than they did 12 months ago because of the squeeze placed on personal finances by soaring inflation and higher prices.

However, this worrying trend goes beyond just the retail sector, and casts an ominous shadow over many small businesses. As inflation nears 10% and wages stagnate, energy prices soar and the cost of basic staples increases, small businesses of all stripes will feel the effects of consumer retrenchment throughout 2022.

3. Startups opt to do their own accounts

What’s happening here?

Research conducted by Business4Beginners and published this week suggests that a clear majority (61%) of startup business owners plan to do their company accounts themselves. Meanwhile, only 28% of nearly 1,000 respondents to the survey confirmed that they intend to hire an accountant to handle their accounts submissions, with the remainder undecided.

Given that hiring an accountant or accounting firm to prepare and submit your company accounts can be a significant cost for small businesses trying to get off the ground, the figures quoted in this new research suggests that most startups are opting to save money at a time when the cost of doing business is on the rise.

Why should you care?

Clearly with rising business costs and a volatile economy, every small startup business has to make difficult decisions as to where to spend money in the early months and years of the company’s life.

However, while it will save money, filing your own accounts comes with certain downsides. Businessmen and women not trained in accountancy will take longer to prepare and submit their paperwork, and are more prone to make errors which could result in fines or in overpaying tax.

Paul Bryant, the founder of Business4Beginners, commented:

I understand that businesses are desperately looking at ways to cut costs. However, they should think carefully before opting against hiring an accountant.

For more information on the topic, you can read our analysis of whether or not your small business should or shouldn’t hire an accountant to do your company taxes and accounts.