While every business is unique, there are common threads running through all companies.  One such thread is the drive to be well organised so essentials are dealt with, leaving business owners the time to focus on moving their business forward. 

The challenge is that there is inevitably something that steers business owners away from their priorities – and often this ‘something’ is identified as red tape.

In the 2011 Sage Business Index the role of government featured heavily – over half of small business surveyed put government bureaucracy and legislation as the least favourable aspect to doing business in their country. 

We spoke to Simone Clarkin, just one our 6 million customers throughout the small and medium business sector.  Simone is the owner of Newcastle based deli Mmm… and we asked for her thoughts on the impact red tape.

“There’s a lot of bureaucracy and red tape involved in being a small business and it takes a lot of time out of your day to cope with that.  It does take a lot of time when it would be nice to be spending time actually dealing with customers and looking for new products, rather than spending time doing ‘back room’ stuff.”

Governments have said concerted efforts have been made – and more are planned – to reduce red tape in a drive to help businesses grow.  These commitments include the Canadian ‘Red Tape Action Plan’ and a pledge by UK Business Secretary Vince Cable to scrap hundreds of thousands of regulations. 

The pledges follow research that is consistent in showing the impact bureaucracy can have on business; Canadian Prime Minister Stephen Harper has called excessive regulations and paperwork “a silent killer of jobs”. 

Mirroring this sentiment, the Australian Chamber of Commerce recently released statistics showing that 72% of businesses are spending more on regulation than they were two years ago.  The report says nearly 40% of businesses surveyed take more than 5 hours each week completing regulatory paperwork.

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Whilst Microfinance has predominately been limited to developing countries, the European Commission recently announced that this is no longer the case.  The second annual report proves that the European Progress Microfinance Facility has been a successful tool and as a result we are starting to see more and more citizens in the EU using the scheme.  Since it was launched in 2010, it has been in place to create valuable opportunities for SMB, entrepreneurs and start-ups.

 And there is no better time than now to embrace such a scheme. With the current climate, now is the time where many entrepreneurs/SMB start-ups could do with a helping hand especially with banks taking fewer risks.  With loans of up to €25,000, people wanting to set up a small business are able to receive the backing they need, taking away the pain of fighting for funding.

 Not only is this good for the economy, but also allows for jobs to be created for people who are deemed as being more risky such as young entrepreneurs who lack experience.  In total, the scheme aims to generate a total loan volume of €500 million for 46,000 micro-borrowers across Europe until 2019.

 Successful projects include a young Portuguese waiter who was able to start his own restaurant in the South of Portugal thanks to a microloan and a Romanian couple who, after losing their jobs in a mining company, successfully started a farm.

 With the present Eurozone crisis as it is, what Europe needs are people who are determined to survive and fight through.  These kinds of schemes help willing and innovative people start their own businesses, drive wealth and bring new ideas to the market, which can only be a great boost to this struggling economy.

We know from past Sage Indices that credit and funding has always been a challenge for SMBs, entrepreneurs and start-ups. There has been much debate about the role of the Government and banks in working together to help ease the burden for a sector that has long been established as the true growth engine of most developed economies – to little effect.

So in true SMB fashion, small organisations and start-ups have found another way forward. Crowd-sourced funding appears to be the positive fallout of the worldwide crisis. An online initiative called Kickstarter has gained popularity in the US where the original credit crunch began and has experienced such huge success it’s now coming to the UK this autumn.

Since Kickstarter’s 2009 launch it has funded more than 20,000 projects, with several eclipsing the $1m pledge mark; remarkable given today’s harsh credit and venture capital environment. If it does as well in the UK, it may well spread further afield. Indeed a growing number of UK-based companies are already using the site, either by setting up a US company or partnering with an existing one.

This is a welcome development that could help ease the current gridlock of stalled economies across Europe – especially since by their own admission, export sales are incredibly important to the survival and growth potential of many SMBS. If sole traders across Europe hired just one more employee, the impact to GDP and the economic outlook would be significant.

If we look at the latest full Sage Index of September 2011, recruiting employees came way down the list of future planning priorities meanwhile diversifying into new markets made first or second place for all countries polled.

Perhaps there are lessons to be learned from moving away from the traditional when the traditional no longer services your needs and do what entrepreneurs do best – be creative in business.

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