Spotlight on: Small business in Wales
Yesterday I travelled to Cardiff to get a view on small business sentiment in the nation and update on our work on progressing prompt payment. With thanks to ACCA and Federation of Small Businesses (FSB) for taking time to meet, and at an individual level to Lloyd Powell Rachel, Lai John, Cullen Thomas Wilkinson Cerith, Williams Penny Lock, Hannah Simpson, and Joshua Miles for your insights and views.
Before sharing what I heard, a couple of key stats on the SME landscape:
There are quarter of a million businesses in Wales, of which 99% are small to medium-sized enterprises (less than 250 employees) and 94.6% are micro-businesses (0-9 employees)*
In terms of sectors, services account for approximately 75% of economic output, manufacturing contributes around 13% of gross value added (GVA), construction is 6%, and agriculture, forestry and fishing account for around 1.5% of the economy (source Welsh Government Economic Statistics)
So, what’s on the mind of small businesses and their support providers? Some key points raised:
Funding: There was a lot of support for the Development Bank of Wales. Two of the accounting entrepreneurs I met had raised funds from this source and credited the efficient response and approval times.
Planning: The same could not be said for the time it takes for planning decisions to be approved, with delays due to resource constraints at a local authority level proving a block on development and growth.
Support: Help to Grow: Management was referenced in highly positive terms with one entrepreneur stating ‘It should be compulsory for every business to go on it.’ In Wales, the programme is delivered by Cardiff Business School and forms part of the support landscape alongside Business Wales.
Prompt payment: Digital adoption is tangibly leading to prompt payment. One of the founders of an accounting business told me how Adfin is helping his business through a) enabling him to get paid on time by charging clients a monthly subscription to cover his own fees and b) helping clients understand which invoices are late and then deploying AI agents to chase for outstanding debt. Smart deployment of this tool is leading to faster money flows across his client base.
Late payment: Construction is presenting an issue as large contractors are taking time to pay subcontractors who are committed to paying their own supply chain within 7 days ie small firms are having to cashflow significant build projects on behalf of larger companies.
Early warnings: There was discussion on the role of accountants and the potential for them to see early signs of a struggling business and, at this point, support with light-weight re-structuring to give the firm time to get back to health. We will look into the this and how, again, AI/tech tools could play a role in detecting payment problems.
Time of change: Wales is going to the polls in May and there is likely to be a shake-up as the nation moves to proportional representation and is expecting to see a more diverse Senedd (Welsh Parliament) across a larger number of seats. This expectation of change is creating an element of uncertainty in the short term ie pre-election, but I also heard reference to the longer term opportunity to consider new business measures and a moment for Wales to define how it wants to be seen in the world, which in turn will influence the type of investment the nation wants to attract and incentives to offer.
In summing up, there were similarities with the prevailing mood in England and a determination from all involved to work together to lift the spirts and sales of small firms.
Diolch yn fawr.