s a small business-to-business publisher, 55 North faces the same challenges that a lot of small employers in Scotland face on a daily basis. They are not specific to the publishing industry and similar concerns have been raised by many business organisations ranging from the CBI to the FSB in the past.
In recent years, there has been a marked shift in the Government's position regarding business, from largely laissez-faire and self-regulation, to a more intrusive, hands-on approach. Whilst this may been necessary in some areas, it appears recently to have
become all-consuming.
At a UK level this can be seen in the introduction and then regular increases in the national minimum wage. Also, the introduction of child tax credit, working tax credit, student loans etc., all of which are now collected via the PAYE system, are an extra administrative burden on small companies who are now effectively doing the work
of the Department of Work & Pensions among others.
Other legislation, well-intended as it may have been, has proven to be completely inadequate when it comes to helping small business. The Late Payment of Commercial Debts (Interest) Act (1998) was intended to help companies to be paid more promptly. In our experience, it has had little or no effect as it requires the supplier (us) to levy and then attempt to recover these charges (as we are entitled to do) from late paying customers. It is obvious to all concerned that the person who drafted this piece of legislation had little understanding of the commercial realities of a company with a turnover of approximately £1m trying to charge interest and a late payment fee to a FTSE 100 monolith.
This is exacerbated by these multi-national companies arbitrarily demanding variations to our standard Terms and Conditions of Business which includes 30-days payment. This happened yet again recently when a FTSE 100 company - whose last set of accounts showed turnover in excess of £10bn and operating profits of over £2bn - wrote to us demanding that we accept 60 days payment terms - effectively 'take it or leave it'!
CASHFLOW CRISIS
We cannot afford to fall foul of these organisations so we simply have to acquiesce and accept their terms. The net effect is further pressure on our credit facilities as we effectively finance their cashflow. When this is added to the rising defaults and failures caused by the 'credit crunch', it is putting an intolerable strain on small businesses. As a lot of small firms are unable to obtain further credit due to the banking crisis, the inevitable outcome of all of this is small business failures on a large scale. What then for the health of the economy?
Leaving aside the UK national issues, our business and its success is inexorably linked to the health of the business sectors that our publications serve: local retailing, licensed trade, electrical contracting and direct marketing. Approximately 70% of the 26,000 magazines we mail each month go directly to small businesses, so if they suffer, so do we.
TOUGH TIME FOR PUBS
One of the sectors that has been hardest hit is the Scottish licensed trade. I don't think that I am exaggerating when I say that the birth of the Scottish Parliament has been nothing short of disastrous for this sector.
Since devolution, Scotland's licensed trade has changed shape dramatically and irreversibly, and pubs which once thrived are now struggling to make ends meet, with an average net loss of three pubs per week in the second half of 2008. The infamous ban on smoking in public places has led to the closure of many businesses, no matter the commendable reasons for its introduction.
Many pubs have struggled since 26 March 2006, and were dealt a further blow with the introduction of the Licensing (Scotland) Act 2005. Currently the country's licensed trade is coming to the end of a transition period which has seen every licensed premise in Scotland having to apply for a new licence to trade. What was supposed to simplify legislative matters for the trade has made them far more complex and the prohibitive expense of entering the new system has been a major factor in 18% of premises failing to meet their own deadline for application. By forcing licensees to spend thousands of pounds on architect and solicitor bills, on top of the costs of the application fee - which itself caused condemnation from all quarters of the industry - the Scottish Government has left one of the country's most recognised and lauded industries permanently scarred.
But it has not rested on its laurels. A recently published consultation document could see the introduction of a Social Responsibility Fee - something that would see many licensed premises paying the price for cleaning up streets and policing costs following anti-social behaviour, with no proof of where the culprits became intoxicated. This Fee has yet to be confirmed, but with the SNP administration's treatment of the pub trade since it came to power, many industry experts see it as a foregone conclusion.
As a proud Scot who was largely pro-devolution, I sincerely hope that the Scottish Government is ultimately proven to have been beneficial to Scotland, the Scottish economy and small Scottish businesses like 55 North. However, until we stop drafting
ill-conceived legislation as a means of justifying Holyrood's existence, small businesses should be on their guard.
