What worries entrepreneurs most
Not surprisingingly it is rising taxes, above concerns about unemployment or rising inflation. Two-thirds said that a hike in corporate tax is a major concern and well-founded.
In March, the UK Treasury announced corporate tax increases from 19 per cent to 25 per cent starting in April 2023. The UK may also follow in US footsteps, where President Biden announced plans in April to increase capital gains tax and top bracket income rates. Almost three-quarters are concerned about future increases in personal tax rates as the UK battles with the economic cost of the pandemic. Sixty-eight per cent are concerned about the introduction of a wealth tax, and 58 per cent about a rise in inheritance tax.
The World Bank’s Doing Business 2020 survey of 190 economies ranked the UK eighth for ease of doing business. This, however, did not factor in the UK’s future trading relationship with the EU, which is anything but clear.
Entrepreneurs ranked supportive regulation and tax incentives for start-ups first and second as the most important factors going forward. A third also believe that it is important for the government to put in place a national industrial policy for entrepreneurs and start-ups.
The ongoing difficult environment has also stimulated sale activity, with more than a quarter saying they plan to sell their businesses between now and 2026.
“The entrepreneurial community is known for its resilience and flexibility, and our report only reinforces that further. UK entrepreneurs have adapted their businesses, wealth structures and even their location in the face of recent challenges,” Duncan MacIntyre, UK CEO at Lombard Odier, said.
The younger cohort (Generation Y, aged 25 to 40) said emotional attachment was their single biggest challenge when selling a business. When giving advice to their pre-sale selves, several respondents raised the concern of tackling the emotional dimension of the transaction. Identifying the right time to sell is the most important lesson learned from selling a business. Those who have been through a sale identified negotiating skills as the second most important aspect.
MacIntyre says the findings also point to an increased focus on planning for future goals, which includes "more time spent on succession issues and more exchanges with family members, something we have seen among our own clients throughout the pandemic. This further highlights the need to factor in both the practical and emotional considerations that come with the realisation of business wealth."
Interest versus action on sustainability
Forty per cent of entrepreneurs say their interest in sustainable investing has risen over the past year. However, just 55 per cent take sustainability into account in current investment decisions, and only 25 per cent of portfolios are allocated to sustainable investments. A third of the entrepreneurs believe sustainable investing means sacrificing returns. Interestingly, this view is more prevalent among younger entrepreneurs.