Tina McKenzie
FSB Chair, Policy and Advocacy
Self-employment can be incredibly rewarding, but without the right support, even the most driven entrepreneurs will struggle. In the second part of our four-part series on entrepreneurship, we dive into the obstacles people face when going it alone—and how to remove them once and for all.
The Federation of Small Businesses (FSB) was created 50 years ago to remove barriers for the self-employed. The nature of business and policy means barriers to entrepreneurship continue to arise and affect individuals at different stages of the enterprise journey.
One of the biggest challenges is Universal Credit (UC). UC can offer valuable financial stability for those starting out. However, it unfairly penalises self-employed workers through the Minimum Income Floor (MIF), which assumes they earn a fixed amount each month, whether they do or not. This reduces their UC payments and makes it harder to get help when their income dips. That’s simply wrong.
Staying competitive in today’s fast-moving, tech-driven world means constantly updating skills. Yet access to affordable training remains a challenge. Subsidised training programmes could provide entrepreneurs with the tools they need to thrive in an ever-changing landscape.
Health is another concern for entrepreneurs. Forty-four per cent of entrepreneurs and 64 per cent of sole traders worry about not getting paid if they fall ill.
Add to that the persistent issue of late payments, a problem that the smallest businesses and freelancers struggle most with due to the power imbalance with a large customer and subsequent inability of small business owners to address it. A large unpaid invoice will have a disproportionate impact on a sole trader. For too long, this has led to cash flow problems and slowed down growth.
Family life is of great importance to entrepreneurs, many start their own businesses because of it. Policies such as the Maternity Allowance have been excluded from previous reviews on family friendly rights and the policy hasn’t evolved in years despite a growth in female entrepreneurship. Policymakers need to be bold and enable new parent entrepreneurs to sustain their businesses. This could have a profound impact on reducing the amount of time women spend out of paid work because of caring responsibilities.
Entrepreneurs have for too long not been considered in policy decisions and face a detriment compared to employees on a range of crucial issues. We’re very pleased that the Government has answered our calls by committing to new measures to tackle late payments to support entrepreneurs. This includes the new Fair Payment Code and forthcoming legislation requiring all large businesses to include payment reporting in their annual reports.
To truly reap the rewards self-employment has to offer, we need a system that supports everyone fairly. Entrepreneurs should be empowered to build their businesses without barriers in the way. By facing these challenges head on, we can create an environment where self-employment is an option for everyone.