Small companies shun worldwide development in favour of retaining it native

The country’s smallest businesses are largely avoiding international expansion and keeping their ambitions local, according to new research.

Despite changes to workers’ rights, the majority of microbusinesses – those with under 10 full-time employees – say they are positive about growing their company over the next two years.

Many small businesses, instead of focusing on national or even international expansion, are looking closer to home.

A survey by Zempler Bank found 27 per cent of businesses prefer local or regional growth, while 17 per cent are eyeing expansion across the UK. 

Those with between 6 and 10 employees are more likely to pursue national growth, the survey found.

Just 12 per cent of small businesses said their main goal was to expand internationally.

It will be good news for the Chancellor who has set her sights on an aggressive growth agenda to kickstart the economy against the backdrop of rising gilt yields, which threaten either tax increases or spending cuts.

And while businesses have ambitious goals, which include launching new products and services, concerns about growth intensify.

Of the businesses that expect modest growth (54 per cent) or have no ambition to grow (24 per cent), over a quarter say economic headwinds are the biggest impediment.

This rises to 35 per cent for both retail and hair and beauty businesses, while just 17 per cent of professional services firms – which include finance and legal – are concerned about the economy.

Rich Wagner, Zempler Bank chief executive, says: ‘Our research into microbusinesses and sole traders gives a fascinating insight into the hopes and fears of the UK’s smallest businesses. The majority are optimistic, pragmatic and share concerns about the economy as well as their family lives.

‘It’s remarkably refreshing and highlights that working isn’t always about money necessarily, but sometimes making your business better and doing something new.’

It comes as a recent survey by the Federation of Small Businesses showed 32 per cent of respondents plan to reduce headcount as a result of the Employment Rights Bill.

More than 90 per cent of members said they were concerned about the bill, with many citing a fear of getting sued under changes to unfair dismissal legislation.

Concerns about running a business are seeping into other elements of their life, with 66 per cent raising concerns about the impact on their mental health, according to Zempler Bank.

Of the businesses expecting significant growth, 40 per cent highlighted continued demand for products and services, while 27 per cent said they have been able to increase prices to customers.

Looking ahead to the next tax year some small businesses could be rocked by increases to statutory sick pay and parental pay, although most will be shielded to changes to National Insurance contributions.

Wagner adds: ‘While sole traders and some microbusinesses are shielded from some of the upcoming tax changes, these changes will still hit smaller businesses hardest.

‘Smaller businesses often don’t have the ability to absorb these additional costs or pass them on to customers in the way that larger firms can. Those operating on thin margins could understandably begin to wonder whether it’s worth the effort.

‘That said, I am constantly impressed by the positivity and resilience of UK business owners… I hope we will still see that positivity and more people seeing the value of starting their own business.’