Changes in Government legislation have reduced the paperwork and red tape involved in launching and running a start-up business from home
Kitchen table businesses were thrown a bone by the Government recently as part of the ongoing drive to stimulate enterprise in this country. The Home Business initiative aims to make it much easier for entrepreneurs to start and run businesses from their homes by reducing the paperwork and red tape involved.
There have been three simple changes to legislation to make running a business from home more appealing: business rates will not have to be paid by the majority of home-based businesses; planning permission will no longer be necessary when using a spare room as an office; and the Government has also made it much easier to run a business from rented accommodation by tweaking the tenancy agreement law.
This wasn’t an obvious sector to champion. Home businesses usually employ no staff and few multi-million turnover firms are still based in a bedroom. However, the sheer volume of home businesses in this country – 2.9m – means that there is a huge economic benefit to giving these firms some extra support.
According to new research carried out by entrepreneur organisation Enterprise Nation, using Department for Business, Innovation and Skills data, home businesses generate £300bn a year for the UK economy. To put this into perspective, this is equivalent to the contribution of the UK’s entire medium-sized business community – also referred to as the unsung heroes of the economy.
Since 2010, the number of home businesses in the UK has increased by 500,000
Homes are also vital incubators for cash-strapped start-ups. 70pc of new firms start off in the home. Innocent Smoothies, Brompton Bicycles, Tangle Teezer, alongside countless other successful UK startups, started life in the home. Not all of these firms graduate to offices either.
Right now, there are around 1.1m home businesses that have been trading for over 20 years. The rise of the cloud, sophisticated online tools and communication apps like Skype mean that it’s never been easier to run a business from home. Emma Jones, founder of Enterprise Nation, explained, “There is a growing movement that is responding to the new opportunities technology brings and entrepreneurs are actively taking control of their own destiny by starting out from home.
“They are hardworking people who now have the capability to trade globally from their own kitchen table. They are growing through outsourcing work to other homebased individuals and as they do so, they are bringing important employment opportunities to rural as well as urban areas of Britain.”
The question is, has government gone far enough to help home businesses to thrive? And do they even need state help anyway? The sector has been growing apace of its own accord: since 2010, the number of home businesses in the UK has increased by 500,000.
Scrapping business rates for home businesses is certainly a positive move. Small business rate relief was already making a real difference to many micro-businesses, but this step not only saves entrepreneurs money, it also saves them time. No more waiting on hold on the phone to the council, no more form-filling.
For John Allan, national chairman of the Federation of Small Businesses, helping entrepreneurs to run businesses from rented homes is the major win.
“One in five FSB members say tenancy clauses are a barrier to running a business from home, so it’s good to see Government acting on this,” he said. “We hope this will encourage potential entrepreneurs to take the leap and start a business.”
But the government could go one step further. Tax breaks for home businesses employing staff is an obvious move. According to Enterprise Nation, if just one in 10 home businesses took on just one extra employee it would create 300,000 jobs across the UK.
For now, however, enterprise pundits and lobbying organisations agree that the current Home Business initiative is at least a step in the right direction.
