The Shorthand – a helping hand with business software

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. More discounts on business software for micro entities

What’s happening here?

This week the UK government announced an expansion of its Help to Grow: Digital Scheme, designed to offer eligible small businesses discounts on software to help them grow in a digitising economy. The scheme was previously only open to businesses with more than five employees, but this has now expanded to businesses with greater than one employee, more than doubling the number of enterprises eligible to 1.24 million.

Under the scheme, eligible businesses can now access a £5,000 discount on vital business software, with 30 software solutions from 14 leading technology suppliers. While previously software solutions were included in the areas of digital marketing and customer relationship management (CRM), now for the first time eCommerce software is included from top suppliers such as:

• Shopwired
• Gob2b
• Kentico
• Comgem
• EKM
• Big Commerce

The addition of eCommerce software in the scheme comes as research by the Economic and Research Council shows that businesses which adopt eCommerce technology see an average increase in sales of 7.5% over three years.

Why should you care?

The expansion of the eligibility criteria for access to these software discounts is predicted to affect 760,000 small businesses with between 1 and 5 employees. For the first time, these businesses will be able to get the £5,000 discount on the range of software products that can be vital for streamlining operations and increasing efficiency.

Shoaib Aslam, Founder of Start My Business, commented:

SMEs rely on a plethora of digital tools from accounting software to marketing platforms to contract tools which increases operating costs, so discounts via the government led scheme are very welcome, and vital to allow small businesses to stay afloat.

This will undoubtedly be of significance for many small enterprises around the country, in a wide variety of sectors. With high operating costs and tight margins, many businesses need this software discount as a lifeline to operate more efficiently. The inclusion of eCommerce software is of particular importance for small scale independent retailers looking to expand their sales operation online and take advantage of the boom in online sales precipitated by the Covid-19 pandemic.

There have been calls however, to complement this expansion of business support with greater support for access to business finance and loans for small businesses.

Access to discounted eCommerce software will help small retailers sell their products online.

2. We need trade deals, and we need them now

What’s happening here?

Tony Danker, the director-general of the Confederation of British Industry (CBI), gave a stark warning this week about the state of Britain’s global supply chains and the effects that both geo-politics and Britain’s trade policy might have on businesses and consumers.

Danker has gone on record to suggest that as the West shifts away from countries such as Russia and China for geo-political reasons, embarking on a process of “deglobalisation”, this change will come at a significant cost to British businesses and consumers.

As the political pressure to ‘deglobalise’ away from dependence on the Russian and Chinese markets rapidly intensifies, there is a real possibility that Britain’s economic resilience will be tested without firm agreements in place for trade deals with new and emerging markets.

Why should you care?

With the exception of hyper-local retailers that source their products strictly from inside the UK, most businesses that sell or manufacture goods will be in some way connected to the UK’s import market, with supply chains reaching right around the globe for many industries.

Running a small business that relies on imported goods or parts means that fluctuations and blockages in global supply chains, caused by the war in Ukraine for example, have a direct knock-on effect on your firm’s operating costs and operating efficiency.

As opportunities diminish to source imports from what Danker calls the “cheapest and most economically efficient” markets of Russia and China, UK businesses are already having to adjust their supply chains accordingly, often at increased cost. The question then becomes whether or not to attempt to swallow that cost or pass it onto the consumer, fuelling inflation.

After Brexit, securing favourable bilateral trade deals with nations of increasing importance to UK supply chains, such as India, Mexico, Canada and Israel, must be a priority for the next government. Low tariff or tariff-free trade deals with these markets of emerging significance would have a cushioning effect on the rising costs of doing business for many small enterprises in the UK.

3. Shop price inflation reaches record high

What’s happening here?

New figures published by the British Retail Consortium (BRC) show that shop price inflation hit 4.4% in June, the highest level since the BRC started its index in 2005.

The worst hit sector was food retail, with price inflation shooting up to 7% in June, and fresh food in particular reaching a worrying 8%. It seems that inflationary pressures across the economy are hitting home in the retail industry, as shop owners are forced to increase prices as operating costs soar.

Helen Dickinson, CEO of the BRC, explained that the soaring operating costs are ​​being exacerbated by the war in Ukraine as well as “exorbitant land transport costs”. Because of this, “retailers are doing all they can to absorb as much of these rising costs as possible”, but as the shop price inflation figures released this week show, there comes a point when retailers simply have to pass on costs to consumers, with the overall figure for inflation in the UK sitting at 9.4% in June.

Why should you care?

The question facing all small businesses during a period of significant inflation and rising operating costs is whether or not to pass on these costs to the consumer through raised prices, contributing even more to rising inflation.

For small businesses, this issue is even more acute. Larger retailers, for example, have greater capacity to swallow operating cost rises without raising prices. This leaves smaller businesses at a competitive disadvantage against their larger rivals if they are forced to put prices up to stay afloat.

Mike Watkins, a business insight specialist at NielsenIQ, commented:

The grocery industry in particular is under intense pressure as retailers try to shield customers from the full impact of inflation. At the same time there has been an increase in competitive intensity so customer retention over the summer holiday season will be key to help stem any further fall in volumes.