As the full impacts of the Covid pandemic come to light across national and local economies, it will be important to focus on our microbusiness sector. Representing more than 2.1 million businesses and 33 per cent of employment in England, their growth has outpaced that of larger companies over the last decade.
These businesses are the lifeblood of our communities. Diverse in nature, they are run and managed by our residents and give an insight into the needs of different communities. They provide some deep insight into the fabric of the places we represent. High numbers of micro retailers in urban environments and market towns, tourism businesses in rural areas and, places of natural beauty and an increase in overall numbers of public administration and health and social care businesses all contribute.
Worryingly however, is the recent evidence that has come to light in data from the Office of National Statistics. This report shows that during the pandemic, microbusinesses were more impacted than businesses of any other size. With nearly 10 per cent more facing temporary or permanent closure and micros representing 89.7 per cent of the total enterprises in England, it could have a detrimental effect on employment and resilience of our communities.
On the surface, pre-and post-pandemic challenges faced by microbusinesses up and down the country are similar, such as access to funding and support, employment and HR, marketing and communication and other wider, mainly external factors. There is also an added level of complexity; business owners with no or little digital skills have struggled most as the world has become increasingly online and cashflow has been even more limited as lending reduces.
But what is the role of councils in ensuring the sustainability and growth of this sector?
We can provide evidence and strategic thinking alongside our partners in business support organisations and a leadership role in ensuring the support on offer is relevant locally. We can use our significant spending power to ensure social value can be directed towards micro, small and medium-sized businesses. Finally, we can use our regulatory role to support planning to provide affordable and suitable workspace and licensing powers to encourage growth of our local markets and sectors such as hospitality and creative and cultural businesses.
Cllr David Renard
Chair of the LGA’s Economy, Environment, Housing and Transport Board and Leader of Swindon Borough Council
Microbusinesses, defined as businesses that have a total of nine or fewer employees, form a strong part of the overall economy in the UK forming 90 per cent of total enterprises in England. Of business enterprises considered micro, 79 per cent of enterprises employ 0-4 individuals. The sector itself accounts for 33 per cent of employment equating to roughly nine million employees and collectively they provide 21 per cent of the economy’s turnover. The microbusiness base in the UK is very diverse with enterprises spread across a range of industries, communities, and local economies. They also represent a large cross section of the population.
The COVID-19 pandemic and periods of lockdown have had a detrimental impact on businesses across the UK, with microbusinesses being disproportionately affected. ONS data from January shows that, during the pandemic they were more impacted than businesses of any other size, with 29.9 per cent having temporarily or permanently ceasing trading in January 2021, compared to 22 per cent of business employing 10-49 people and around all 11.5 per cent of larger businesses. Evidence suggests that if micros are not supported in their recovery, there could be a significant impact on unemployment, particularly as many larger firms are currently unwilling to take on new employees as a result of the pandemic. Due to this disparate impact, the Local Government Association commissioned Shared Intelligence to conduct research to understand microbusinesses in different local economies and the role councils and their partners can play to support them.
Evidence for this document has been collated through a number of primary and secondary sources, including a literature review, surveys of microbusinesses and business support organisations, scoping and roundtable discussions with council officers, business support organisations, and microbusinesses. These sources have been used to develop this guide, which focuses on the challenges that they face; the types of support that is available to them; the role of councils in supporting their growth and sustainability; and provide good practice case studies of the different roles played by councils and the business support landscape in their localities.
The microbusiness economy
Over the past decade, the number of microbusinesses has grown at a faster rate than non-microbusinesses. They experienced a 34 per cent increase between 2010 and 2020, while the next highest rise was seen among medium-sized businesses (50-249 employees), which saw a 28 per cent rise during the same period. Microbusinesses are becoming an increasingly large proportion of the total business base in the country. It is therefore important that these businesses are supported effectively as they have a vital role to play in supporting and leading the economic recovery from the pandemic.
London has the highest proportion of microbusinesses among all regions, with 91 per cent of all enterprises having up to nine employees, while the North East has the lowest at 88 per cent. London also experienced the highest increase in the number of microbusinesses between 2010 and 2020, with a 62 per cent increase, almost double the growth of the next highest region, the North West at 32 per cent, as shown on Figure 1. The marked difference in growth between regions could be due to the apparent increase in professional services such as accountancy firms in urban settings like London and the rise of the gig economy, while regions dominated by larger businesses in traditional industries experienced lower growth.
|Yorkshire and The Humber||29%|
The microbusiness economy is incredibly diverse by sector but has a particular concentration in four key sectors: Professional, Scientific and Technical Activities; Wholesale and Retail Trade; Construction; and Information and Communication. The balance of spread across these sectors varies by region which brings forward different levels of needs catering to different types of businesses.
Our research has identified microbusinesses differ in terms of aspirations and motivation. There are many lifestyle businesses which do not have plans to grow or take on additional staff. Business Support Organisations highlighted through the research that, in many cases, these types of businesses struggled during the pandemic due to being risk-averse and not being flexible enough to adapt their business model. Likewise, roundtable discussions also raised that businesses owned by older owners were more likely to struggle during the pandemic, in comparison to young and entrepreneurial owners who were more adaptable and had the necessary digital skills to pivot their operations.
We have identified that there is less diversity in the demography of those who set up a microbusiness compared to the overall population. Data collected by Department for Business, Energy and Industrial Strategy via their Longitudinal Small Business Survey indicates that only five per cent of SME employers were minority ethnic group led (MEG-led) in the UK in 2019. As microbusinesses make up 96 per cent of all SMEs in the UK, this highlights that the proportion of MEG-led enterprises among microbusinesses is small.
The same survey finds that only 15 per cent of microbusinesses were women-led in 2019, with these businesses more likely to be centred in education, health, accommodation and food services, and administration sectors, highlighting the under-representation of women in ownership. Evidence also suggests that women are more likely to have lost their job during the pandemic due to unequal caring responsibilities. These findings across age and gender highlight that understanding micro businesses in your local area can also help to understand broader inequalities and develop the most suitable and targeted support packages and offers.
For example, the Marches Growth Hub highlighted that during the pandemic they received an increase in queries from taxi-drivers of Asian ethnicity asking for assistance with grants due to English not being their first language. The support provided by councils and the business support sector will therefore be different and diverse depending on the specific needs of local economies and communities.
There are clearly significant differences in the types of microbusinesses and the challenges they face, with many of these challenges changing over time. During the pandemic, many microbusinesses were forced online, while microbusinesses operating in traditionally face-to-face sectors have fared less well, unless they had an established client base. We have identified examples of where councils have stepped in to provide support, such as Leicester City Council, where a bespoke programme targeted at designer-makers has been developed to teach those businesses how to build a website to help them get online, as this was identified as a key issue within their area.
Likewise, other issues identified during the research include the fragmented nature of the funding landscape making it harder for micros to access financial support; challenges around recruiting and retaining employees; and a lack of digital skills among a majority of microbusiness owners leading to barriers in digital marketing and digital transformation, which are covered in the next sections.
The challenges facing microbusinesses
The microbusiness sector is an incredibly diverse sector, and with that comes equally diverse challenges. The challenges that a business faces will vary by the sector of the business, its age, its location, the owner and their motivations, and many other factors. However, there are challenges which cut across many of these factors and are significant for most microbusinesses. In the research, we have identified four themes in which microbusinesses face particularly common challenges. These are: funding and support, employment and HR, marketing and communication and wider, mainly external factors.
While there is a range of experiences of microbusinesses, one important factor in starting a business is having access to a source of funding to develop a product, advertise the service they are selling, to purchase supplies, for set up costs and many other purposes. The need for this funding, and the amount of funding required will vary between different microbusinesses considerably. Some sectors have high entry costs, which make it more challenging to raise the total funding needed, while others may have lower entry costs, meaning it is possible to fund the initial entry costs from personal savings and bypassing the need to seek funding.
Furthermore, the funding requirements of a business changes depending on its stage in its lifecycle. Often, businesses at an early stage will need support for set up and development, while businesses at later stages may need support to expand their business output. This means that microbusinesses can have very different funding and financial needs at different points in their lifecycle. At the same time, accessing traditional models of borrowing from a bank based on a business plan have become increasingly inaccessible to new microbusinesses. This has had a significant impact on their ability to operate.
Microbusinesses are therefore turning to other sources of funding. This landscape is very varied in the types of funding support available to them and there is still considerable uncertainty in raising finance for a business. The options for accessing non-traditional sources of funding have grown over the last decade and today there are more finance options than ever, including start up, mezzanine (raising finance through debt and equity financing), invoice factoring (borrowing against the amount invoiced) and non-financial support, a number of councils have begun to provide this sort of funding, examples of which can be seen in the case studies. While this should make capital more accessible, it also makes finding the right funding source increasingly difficult.
We have also identified that much of this funding groups microbusinesses with all SME businesses up to 50 employees, despite them having very different requirements to the larger businesses. This means it is challenging for microbusinesses to access funding, as a competitive pot of money often goes to the business with a proven track record of success. Where there are opportunities for microbusinesses, these are often fiercely competitive, and support only the businesses which are considered to have the highest growth potential.
Finally, a microbusiness can often struggle with cashflow. Having poor cashflow is one of the biggest causes of failure, as many operate with small profit margins. An inability to reinvest money in other areas of the business, such as innovation and research and development can have a significant impact on the success of the business. Managing debt is also essential for a microbusiness, and a recent study identifies that 15 per cent of microbusinesses have ceased trading because of their debt, compared to 6 per cent of non-microbusinesses.
Employment, HR, and Capacity
Business planning is an essential part of the growth and survival of a microbusiness. The internal running of a business, from developing a business plan through to taking on a first employee and beyond, presents several challenges for new business owners. It is often the case that microbusiness owners need to have experience in all facets of running a business or be clear where they can access support to develop these skills. They also need access to different skills at various points in their lifecycle to complement their own entrepreneurial talent.
One of the most significant challenges a microbusiness faces is taking on its first employees. It is essential that a microbusiness can find and attract skilled employees who are adaptable. Attracting these employees can be a challenge for a new business and there is a justifiable concern among many microbusinesses that taking on new employees is very expensive and time consuming. These can be overcome, and it is often beneficial for the microbusiness in the long run to overcome them.
There are clear challenges for a microbusiness owner where they need support to understand some of the complex aspects of running a business. Some businesses may struggle with many aspects of HR or regulation but may be more successful in advertising their product. In contrast, another firm may have the internal knowledge on HR or regulation, but struggle to creatively advertise their business. Rectifying these issues can be difficult where there is a limited amount of capacity to take on training and upskilling. While some opportunities exist from peer-to-peer support and networking organisations such as chambers of commerce, microbusinesses also struggle to identify other opportunities to learn and share knowledge with each other.
Marketing and communication
One of the most significant challenges microbusinesses face is advertising their products and attracting new customers. Research in London suggests that 59 per cent of microbusiness owners are concerned about this issue. While using social media and other platforms is a path to some level of success, often businesses struggle to advertise their products to the right groups of potential customers, particularly in finding the platforms and groups which offer the most potential.
As a rising number of microbusinesses become successful and develop a niche, the industry becomes increasingly competitive, and it becomes harder for new entrants to attract the attention of potential customers without marketing. This is particularly true for local microbusinesses as people, particularly during the pandemic, have increasingly made purchases online rather than in physical shops. Microbusinesses also face challenges from multinational organisations, against which it is difficult for a microbusiness to compete, accelerating a trend which was already the case before the pandemic.
The other significant issue for a microbusiness is therefore to develop its digital awareness, abilities, and capabilities. Before the pandemic, these skills were often not seen as essential, and many did not see a need to invest in digital. In contrast, the pandemic has highlighted the need for these skills, and it has become essential for almost them as a result.
While ensuring a microbusiness can operate online is becoming increasingly important there are challenges preventing many microbusinesses from fully embracing their digital capabilities. The first issue is time, which is more significant than cost. Often, microbusinesses do not have the capacity to train in this area during working hours. Businesses therefore have to either use external support to develop their website and other digital capabilities, employ specialist staff in this area, or develop the skills themselves, which often requires significant time investment.
Microbusinesses can also face external challenges. Many of these specific factors differ depending on the environment in which a business operates, and the clearest nuance in these external issues is rural-urban geography.
The biggest issue is connectivity and access to fast broadband. Even where microbusinesses have the skills to adapt to digitalisation, which has become near essential during the pandemic, there are areas across England where poor quality and low speed internet holds back these businesses. Smaller businesses are also the most likely to experience difficulties with broadband, and 24 per cent of sole traders and 21 per cent of all microbusinesses have reported difficulties. Similarly, digital poverty can be a significant issue, which has begun to be addressed by councils such as Hull.
Rural areas can also suffer from a lack of available employees with a local “brain drain”, where degree holding graduates move to cities after university, rather than moving back to rural areas. This means there is a particular challenge for businesses to recruit employees where they operate in rural areas.
Beyond this, as microbusinesses grow, there is often a need to find professional office space, rather than working from home. This is a major concern for growing microbusinesses. In rural areas, there has historically been an under provision of office space compared with residential space.
In contrast, microbusinesses operating in urban areas have other issues. In London, high and increasingly unaffordable operating and rent costs have a considerable impact on a microbusiness. While there are opportunities to move to a more home-based working model, microbusinesses often value the social and professional interaction which comes with co-working facilities and networking.
Outside of the different rural and urban experiences, the cumulative burden of regulations, licences and fees can have a significant impact on a microbusinesses’ ability to maintain cashflow and growth. Research has identified that the complexities of employment law and its implementation actively hampers and prevents businesses taking on employees. This is likely to become more complicated as the economy recovers from the pandemic.
Microbusinesses also raised issues with the tax system, which is complex to navigate for small businesses with limited experience in producing a tax return. Many of them could benefit from further support from a business support organisation, particularly as using an accountancy service can be expensive for a new microbusiness.
To be able to provide support to microbusinesses, councils will need to understand the types of support which is available locally, regionally and nationally. Organisations offering support to microbusinesses vary greatly up and down the country. There are some 34 categories of business representative organisations and trade bodies identified on the Gov.UK website in relation to provision of advice to businesses. These range from organisations or bodies supporting aerospace, defence and aviation to tourism and transport. Within this long list of organisations, there is also a geographical dimension, for example Made in Yorkshire, Made in Midlands and Made in London, which are based on “a pledge signed by manufacturers to open a channel of communication with local firms, take on apprentices and export to new markets”. In addition to geography, there are organisations which primarily support a particular demographic group such as the National Black Women’s Network and the UK Asian Business Council.
Although not a comprehensive list of organisations operating in this space, the below outline provides a flavour of the types of support offers. It also illustrates the complexity of the landscape and highlights the need for councils and their partners to be aware of their local landscape in order to fulfil their “convening” role.
These provide intensive and time-limited business support for cohorts of start-ups, aiming to get them ready for investment more quickly than traditional incubators. They are selective in terms of which businesses or individuals they accept onto programmes and identify those with growth potential. Peer to peer learning, mentoring and facilitated networking are common across accelerators. Often offering accommodation, they are funded through a mixture of central government, universities and corporate income as well as their own revenues.
Business support organisations
This broad title covers a collection of organisations offering support to organisations. The offer varies and most are funded through a cocktail of funding. While some are fee paying and membership led, there are others that draw on public or private sector funds to support their particular sector, geography or demography. Notable examples include:
British Chambers of Commerce – offering support and routes to connecting companies through sharing best practice, building new relationships while providing practical help to ensure members can trade locally. There are currently 53 accredited chambers.
Federation of Small Business (FSB) – representing small businesses and the self-employed. As well as advice relating to COVID-19, it also offers legal advice and support around mental health, debt recovery and employment issues.
Institute of Directors (IOD) – a membership organisation offering access to business information, flexible working spaces as well as training, professional expertise, and networking opportunities.
National Enterprise Network – representing organisations that are involved in enterprise development including enterprise agencies, local authorities, and other specialist providers. Offering new business opportunities and influencing policy makers on matters most important to small businesses. National Enterprise Network manages the approved register of local enterprise agencies on behalf of the Department of Business, Energy, and Industrial Strategy (BEIS).
Often managing an enterprise centre, enterprise agencies are a collection of organisations supporting their local business population with a large majority being microbusinesses. They offer a variety of services such as marketing, financial, innovation support, networking and accommodation. As a BEIS Approved Enterprise Agency, they must have core objectives to encourage and support small businesses in a local community as well as operate as a not-for profit. This allows a particular form of tax relief.
Incubators are designed to help start-up and early-stage businesses grow and thrive. They provide a combination of co-working space which promotes collaboration, networking opportunities, introductions to investors or access to seed funding and, access to mentors and business advisors. There are different business incubator programmes across England, and they tend to have a sector specialism and cover different geographies.
Local Enterprise Partnerships (LEPs)
There are 38 LEPs in the country all covering a distinct economic spatial area. As a local business led partnership, LEPs work closely with councils to drive local economic priorities and support investment in their local area. Their primary aims are to drive growth and local job creation. They are part funded by government (central and local) as well as through a range of investment models. The Growth Hubs, operated by LEPs, provide valuable support to micro and small and medium-sized businesses (MSMEs). During the pandemic Growth Hubs have seen an exponential increase in requests for support, for example, Swindon and Wiltshire LEP saw website traffic for their business support up by 300 per cent at the height of the pandemic, with year-on-year cumulative website traffic up by 86 per cent in the last year.
There are many companies that offer professional services to microbusinesses including solicitors, accountants and increasingly cyber security experts. This offer is generally provided by the private sector in a paid capacity and is often provided to tackle an identified issue that the microbusiness may face.
Also known as trade associations, industry trade groups and sector groups are founded by the trade or sector which they represent. Mostly funded by businesses operating in an industry, they provide specific advice and support relating to the needs of that individual sectors. They main have national coverage and some have an international remit as well. Along with sector groups, partners work closely together to define priorities and activities.
Many universities in England offer free or heavily subsidised support to SMEs and microbusinesses. This is often targeted at specific sectors that are prevalent in the local areas and represent the specialisms of the university itself. Funding for the support to micros is often linked to European Union Structural Investment Fund (EUSIF) programmes (which closes in 2023) of the European Social Fund or through the European Regional Development Fund, through paid for activity or through cross-subsidisation by the university itself. They often play a coordinating role encouraging networking and the development of peer networks. There are particular innovations across the university sector such as the “free student-led service for local businesses and entrepreneurs” at London South Bank University’s Business Solutions Centre.
The role that councils play
With a vast range of support offers from different organisations, microbusinesses often struggle to navigate it. At the same time, what is clear from the research is that no one single offer fits all. This is illustrated in the case studies in the next section.
The support offered to microbusinesses by councils at a statutory level or through their hard powers changes depending on the type of council. They can have a specific role to play as a regulator through the management of business rates, planning services, environmental health and trading standards. Beyond that, and despite reduced budgets, their activity has included many facets to encourage business development through, for example, managing EUSIF funding under European Regional Development Fund (ERDF) for business support projects. This enables close working with LEPs through Growth Hubs as well as tackling wider regeneration aims by delivering workspace and regeneration projects.
Before the pandemic, the decline of the high street was also a priority for many councils. This supported traders in markets and in the hospitality, independent retail sector and creative sectors. Councils are also increasingly championing social value with ambitions to break down supply chains and encourage micro, small and medium-sized businesses to tender for contracts.
There were several areas where broad agreement has been reached about the role of councils in supporting microbusinesses which focus on their soft powers. Councils cannot afford to overlook this critical part of the economy in helping to build resilience and encourage growth for communities and local sectors, however they also cannot ignore the efforts of the huge range of business support organisations which already exist. Therefore, the niche that councils can fit into in providing support is set out below.
Setting the strategy and developing the evidence base
As champions of place, councils have a role as an anchor institution in their locality. This place leadership starts with knowledge of the local communities – resident and business. By establishing this strategy, using local evidence and working closely with partners across business and the business support landscape, a segmented response to the challenges facing microbusinesses can be developed. This approach gives clarity to an area and begins to develop an identity.
Working with partners
As conveners of partners, councils are in a position to enable, influence and build capacity. This does not always require a financial relationship but a way to ensure that the relevant bodies are supported to carry out their own missions. In the case of microbusiness support, Local Enterprise Partnerships, Growth Hubs, business support organisations and sector-based organisations all provide valuable services. By taking the time to understand and map the landscape, developing a set of priorities and drawing together a plan of collective activity to deliver outcomes will make a greater impact.
Setting a framework for business support infrastructure
As the impacts of the COVID-19 pandemic become clearer, fragility within local economies will become more exposed. This provides both an opportunity and a challenge.
Of most relevance to the microbusiness community is the council’s role in creating the conditions for them to survive and thrive. For example, addressing market failure and reversing the declining high street and business districts offers opportunities for empty shops and offices to be repurposed. Microbusinesses, through this research, highlighted the inability to take on accommodation themselves due to high entry costs (particularly in places where there is a lack of co-working or incubation space). This is particularly prevalent in rural areas and is an area in which local government can make an impact.
Supporting and coordinating investment
Linked to the need to set the strategy is the role of councils in coordinating investment. This includes the identification of gaps in the local offer. Areas most consistently highlighted through the research includes digital skills, affordable workspace and grant support. Recent funding schemes released in the Budget 2021 highlighted opportunities for supporting microbusinesses. The Community Renewal Fund for example has been established to deliver investment in skills; investment for local business; investment in communities and place; and supporting people into employment.
This can also be mirrored through the balance of discretionary COVID-19 support funding. Councils are in a position to allocate funding to initiatives that will stimulate the microbusiness economy, making sure that their needs are met.
Providing accessible information
An area highlighted by microbusinesses requiring a focus in the case of many councils, is the provision of information in an accessible format. Often limited to information on business rates, licensing and guidance on planning and health and safety regulations, the pandemic has demonstrated that microbusinesses are confused about the wider offer. This does not mean that councils themselves must directly deliver but offer a clearly navigable view of the support on offer.
The following section outlines some of the roles which councils can play in providing support to microbusinesses through three examples. These examples represent potential models of support which could be offered to microbusinesses, demonstrating examples of where councils can be active in the support landscape, while not duplicating support which already exists.
Microbusinesses as a proportion of total businesses
|Region||Percentage of total business|
|Yorkshire and The Humber||88%|
Growth of businesses by employment size band
|Business size employees||Perecentage growth|
Buckinghamshire Business First
Buckinghamshire, in the South East of England, has one of the highest proportions of microbusinesses in the country with 91.5 per cent of all businesses employing less than ten people. Buckinghamshire Business First was first developed as a joint venture between ten local entrepreneurs and business leaders to support business growth in Buckinghamshire in 2011, aiming to establishing a place for businesses to access support. While BBF is not local authority led, Buckinghamshire council matched the initial funding put up by the founders and others and have been a major contributor over the last ten years, co-investing in the support. BBF has grown to a team of 60 people and is able to provide a wide range of support and advice, as well as being able to triage towards other Business Support Organisations where relevant.
BBF have several support programmes for microbusinesses which benefit the local economy and, in total, actively engage with around 13,500 of the 32,000 total businesses in Buckinghamshire. Support has been focussed on the four priority sectors, space, creative industries, high tech manufacturing and health, but also provides help to all businesses which need support. The first support offer is to act as a point of contact, both by email and by phone, for high volume enquiries. They have also run a number of opportunities around helping small businesses to decarbonise, the funding of which has come from the European Research and Development Fund.
In addition, BBF do a considerable amount of outreach. For microbusinesses, they have set up pop-up stalls in shopping centres and around shops and engaged with the local community boards in Buckinghamshire. Buckinghamshire Business First also have strong links with the council. Awareness of the organisation and what they do is part of the induction package for new councillors, and the organisation is working with councillors to ensure that business owners who contact a councillor for assistance are passed on to them.
In turn, the overall programme has benefitted Buckinghamshire in several ways. BBF supports the councils’ aspirations around having a strong local economy and supporting microbusinesses, through the provision of several support programmes. It also removes the risk of duplication of provision, and pools resources to better help all microbusinesses. It is essential for businesses to understand where to go for support and therefore having the single point of contact has been particularly useful.
The council also gains considerable benefit from their investment in BBF. As BBF is the main business support organisation in Buckinghamshire, there is an opportunity to leverage funding to achieve better results than individual support organisations. For every pound contributed by Buckinghamshire Council, BBF can leverage that funding to generate £14 of additional funding, benefitting businesses through this and through economic of scale. These benefits demonstrate the success of the co-investment model.
Buckinghamshire Business First has been very successful in supporting microbusinesses and other businesses through the variety of offers. During the 2020/21 year, they have assisted 50,000 businesses, helped create 710 jobs, and helped bring 400 new products to market. Much of this has been focussed on microbusinesses. The next year of activities for Buckinghamshire Business First will have a major focus on Covid recovery support, in addition to SME growth and productivity, including supporting microbusinesses in priorities around decarbonisation, innovation, and job creation.
Key Learning:Funding can be leveraged through this model, as the pooling of resources generates certain economies of scale and size, enabling the organisation to access other sources of funding.
A single organisation providing support can act as a single point of contact, ensuring that microbusinesses know where to go to access help and avoiding the risks of duplication.
Ensure that councillors are aware of the organisation, and that they are willing to direct those who need support to the organisation.
Staffordshire County Council
Staffordshire, located in the West Midlands, has a history of providing support to microbusinesses, both as part of a wider offer for SME businesses and through a number of specific programmes. The council also has a strong collaborative relationship with Business Support Organisations. Staffordshire has 29,545 microbusinesses, according to the latest estimates from the ONS. This accounts for 89.6 per cent of total businesses within Staffordshire, the vast majority of all businesses within the county. Therefore, while there has been a focus on SME businesses, this has naturally meant concentrating on microbusinesses in most of their programmes, in addition to bespoke support specifically designed for microbusinesses.
These are mainly focused on the county’s priority sectors, including manufacturing, engineering, professional services, as well as the leisure and tourism sector. They also provide support through their direct programmes to any business in need. To ensure there is no duplication across the county, and to help develop a shared understanding of the types of provision across Staffordshire, the council hosts a bimonthly roundtable of all business support across the borough. This has been ongoing for several years and has been very successful in developing the relationships of business support organisations across the council. The forum allows business support organisations to share information with each other and directly offer help, with the growth hub advisors being able to coordinate and understand this range.
Having this understanding is essential for the offer which is provided by the Council. One example of this is the provision of a service for small businesses, run under procurement by the chamber of commerce. This allows any small business to phone or email an expert who can provide guidance them with issues, such as regulation, or put them in contact with a Business Support Organisation which could help. The helpline now receives between about 100 and 120 calls per day, in addition to receiving 140 to 180 emails per day.
The county also provides more direct targeted programmes. Staffordshire went into partnership with the Black Country Reinvestment scheme to lend money to businesses, primarily microbusinesses, which have struggled to access other funding over the last decade. These businesses are often seen as too risky or without the track record to secure other funding. This has been successful, and they are now ready to launch the sixth round of funding.
During the pandemic, Staffordshire have also founded a half a million-pound emergency grant fund for microbusinesses, to support them with grants of up to £1000, for any business that was struggling to pay a bill as a result of the pandemic. The scheme launched in June 2020 and has supported businesses across the county which have not met government support criteria.
Finally, the county has also set up a support scheme for those who have been made redundant to help them to start a business. This has so far supported 182 people, of whom 57 per cent are female, while 42 per cent are under 30. This support scheme includes confidence building courses and information for launching a business. The scheme has helped over half to start trading, or to be prepared to start trading. The council is now considering a second cohort of people to support.
However, there is still a challenge in reaching out to microbusinesses which do not engage with any of the support offered by the Council or business support organisations within Staffordshire. While the county has been able to engage with up to a third, through various activities such as newsletters, the county still has ambitions to take this further, and are planning sessions to engage with those hard-to-reach businesses through workshops.
Key Learning:Frequent collaboration and discussion between business support organisations can generate opportunities for cooperation and a greater understanding of the needs of microbusinesses.
It is challenging to reach large numbers of microbusinesses, even where they would benefit from support the council provides.
The City of Kingston-Upon-Hull, in Yorkshire and The Humber, has a sizable proportion of microbusinesses, with 82.9 per cent of total enterprises having less than ten employees. The economy team in the Council have worked extensively to support microbusinesses and are now embarking on a process of consultation for a new strategy to support them.
The provision by Hull includes grants through the John Cracknell Youth Enterprise Bank. Focussed on young people up to the age of 21, this offers grants of up to £1,000 for individuals or groups to support the development of their ideas. This has benefitted over 450 young people during the fund’s existence, in a range of different areas, from computing to hairdressing equipment. The scheme has won a number of awards for its offer.
During the pandemic, Hull have also supported microbusinesses where there is no existing provision. This has been particularly focussed on microbusinesses which do not qualify for government support grants, and is aimed at sustaining the business, and in some cases for the business owner. This has provided a total of 128 grants, 85 focussed on business while the rest are focussed on the social stability of the business owner. The issues which these grants cover are extensive, but can be as simple as supporting the purchasing of internet data where businesses cannot afford to do this.
In addition, the pandemic has enabled them to better work with their existing contacts. For example, there has been a more informal atmosphere over online meeting software, but this has enabled them to better understand the businesses priorities and to meet the needs of young people. This has highlighted the need for additional help for the wellbeing for sole traders and small microbusinesses.
They have also put in place policies to reach out to microbusiness owners across the area. They have run a series of engagement events, where they invite owners to present their business, and the audience, which includes a range of young people and professionals who can bid to help the microbusiness through their time or through a financial contribution. They have also run events in shopping centres, Sure Start centres and many other places. Further, they have actively engaged with voluntary community groups and others, both before and during the pandemic.
Hull are now developing a new strategy for engagement with microbusinesses to help the development of the priorities of the new Hull and East Yorkshire LEP, and for the planned “One Yorkshire” devolution. Within this, they are prioritising all microbusinesses, expanding their support from young people to encompass business across the whole spectrum.
They are also creating a charter for microbusinesses within Hull, for the whole of the business landscape including the Council, which is being developed from grassroots engagement. This will give them a firm foundation for moving forward and provide an effective lobbying force for further supporting microbusinesses within the LEP.
This is being developed currently through a first round of consultations with 100 individuals either from a microbusiness or from a business support organisation, with the split being roughly even. They are intending to go through another couple of rounds of consultation for the work to get genuine buy in from microbusinesses and support organisations.
This consultation aims to understand the needs of microbusinesses and to understand what support they need in the future. Early findings indicate that many they have struggled to access funding, and that a combination of grants and loans is likely to be of most benefit. The strategy is also taking into account other support provision and is ensuring that there is no duplication.
While the new strategy is being developed, Hull is continuing to maintain its current support offer focussed on young people. Once the strategy is developed, the team have bold ideas on how to expand support further to disenfranchised communities, ensuring they have access to support to set up a microbusiness.
Key Learning: There are opportunities for councils to be agile in providing support to microbusinesses in areas which have been identified as having no existing support, particularly during the pandemic.
In consultation with business support organisations and microbusinesses, the council is beginning to understand the specific issues which impact on them across Hull.
Leicester City Council
Leicester, like many areas across the country, have seen the number of microbusiness enterprises outgrow the overall rise in businesses in the past decade. The number of businesses in the area have grown by 62 per cent between 2010 and 2020, whilst businesses with an employment size band of 0-9 employees have overseen a 67 per cent increase. The creative and cultural sector are considered to be important priority sectors in Leicester, and Leicester’s Economic Action Plan refers to opportunities for strong growth especially in regard to the growing cluster of creative industries centred on St George’s Cultural Quarter - one of four Leicester Business Investment Areas to help accelerate growth in priority sectors.
Building on previous successes in running European Regional Development Fund (ERDF) funded creative enterprise projects within the area, Leicester City Council (LCC) delivered an additional ERDF funded project in the form of the Creative Enterprise Hub (CEH) in 2010. LCC developed the CEH to build on the success of past ERDF funded projects by providing an offer in the Cultural Quarter on top of the workspace offer at Phoenix Square and Makers’ Yard, and the established offer at Leicester Creative Business (LCB) Depot. This hub was established to help provide comprehensive business development programmes to the creative industries in Leicester - of which a large proportion are micro-sized. An evaluation of the CEH programme found that the most common type of businesses supported by the project were microbusinesses, with 70% of respondents employing only one person, including themselves.
The CEH programme was split into two core elements: the first focused on pre and early start businesses, whilst the second was concentrated on developing existing creative businesses in Leicester. Having identified the creative industry as a growth sector in Leicester, LCC recognised that creative businesses needed particular focus and provided this via the CEH. This offer included: face-to-face support, 1-2-1 coaching, mentoring, tailored management and growth workshops, supply chain networking events, and signposting to other relevant organisations.
The evaluation found the programme to be hugely successful as it has supported creative entrepreneurs to begin trading and establish themselves, and many pre-existing businesses have flourished as a result of the support received, overcoming barriers, and entering new markets that the entrepreneurs felt they would not have overcome without CEH support. The programme was also found to have provided creative businesses with confidence to get started; confidence to grow and expand; support with revenue and cashflow; and has helped develop business networks within the Cultural Quarter. The development of networks amongst businesses has allowed them to form partnerships and share good practice and learnings with each other. As a result, the area now has a thriving creative business network, with many examples of collaboration between firms, and of businesses wanting to be located in the Quarter to participate in these networks and access the talent and expertise of these businesses.
This particular example highlights where a council successfully identified their priority area before providing bespoke support. The Council has also been able to support microbusinesses during the pandemic by partnering with their local growth hub to provide a host of webinar programmes, including one on setting up a website to help designer-makers get online which proved to be very successful and led to the webinar being repeated multiple times. The LCC also identified the development of networks to have helped with spreading of information regarding support offers available within the area amongst creative businesses, alongside the existence of a council-wide newsletter for creative businesses.
Whilst the CEH programme has been highly beneficial for creative businesses in Leicester, there is a need for a coordinated approach to build on the success of the current workspace provision and of similar projects to retain this activity in the Cultural Quarter. The council understands that to ensure this continues to grow, any successor project would need to include the mentoring and face to face support that CEH provided – which were the most subscribed support services.
Key learning:There is a need to identify specific priority areas, so support can be tailored towards the needs of microbusinesses within those sectors.
The success of a tailored support programme can generate considerable returns, including collaboration and networking between businesses, and encourage more businesses to engage with the programme.
Build on this approach, and similar approaches, to ensure that the success of these types of projects are secured in the long term.