When Rhodri Ferrier and his business partner Simon Duffy set up Bulldog, a
maker of men’s grooming products, they were overwhelmed by paperwork. The
pile included forms for Vat, PAYE, National Insurance, health and safety,
stakeholder pensions, corporation tax, employment law and business rates.
Their experience was not unique. The average small-business owner spends seven
hours a week on red tape, according to the Federation of Small Businesses –
enough to deter people starting up.
Finding the right information and advice can take much of the pain out of
complying with legislation, however. Advice from good accountants and
lawyers was vital in negotiating these thickets of legislation, said
Ferrier. “The most surprising thing when you start up is that you aren’t
dealing with a single government agency, so while there are resources like
Business Link out there to help you wade through it, there is still a huge
amount of work to do. You don’t really have any choice when it comes to red
tape.”
Red tape need not strangle your enterprise at birth, though. A good way of
getting to grips with it is to network with, and seek advice from,
established firms, according to William Sargent, chairman of the Better
Regulation Executive.
“Join the relevant trade associations and pick the members’ brains. Find a
mentor or a friend who is in business. Business people are remarkably
generous in sharing their time.”
Although there is a lot of legislation to comply with, government departments
and agencies are getting better at helping start-ups work out what they do
and don’t need to know, said Sargent.
“There is so much more information around than when I was starting a business.
The Health and Safety Executive, for example, is producing good, short,
simple guides covering each business sector telling you what you need to
know and do.”
A good way to approach regulation is to divide the rules you need to know
about into manageable chunks, said Ganesh Selverajah, an adviser from the
government-backed Business Link service. “A good way to break it up is to
think about place, people and product.
“Place means the location you are working at. There will probably be
health-and-safety implications if you have set up a place of business or
even if people come to see you in your home on business.
“When you employ people, a range of other regulations apply and when you
employ more than five people, even more human resources and pension rules
come into effect, so that’s probably when you need legal advice.
“Then there are rules covering your product or service. Ask yourself is it
safe and are you covered for its use? Another area relating to products is
intellectual property. In many cases companies are not careful enough and
infringe someone’s trademark by inadvertently copying it.”
Calling in experts can cut down the time you need to spend on red tape.
Businesses such as Liquid HR offer advice lines to help small firms comply
with health and safety, legal and human-resources regulations.
Membership of the Federation of Small Businesses is another option. Costing
from £130 a year, it includes free access to 24-hour legal and
health-and-safety help-lines as well as templates of legal, contractual and
employment contracts to download.
Outsourcing some business functions altogether is another way to avoid red
tape. It then becomes someone else’s problem.
Some work, unfortunately, is still unavoidable, said Ferrier. “It is worth
spending decent time upfront to determine which legislation affects you. If
you can afford it, get yourself some strong advisers who have been through
these issues before and make the red tape somebody’s responsibility. It is
all too easy for it to fall through the gaps if you don’t.”
While start-ups struggle to become compliant, the government claims to be
doing its bit to cut red tape for British firms, although it has its work
cut out in convincing them of this. According to a survey carried out by
HSBC, 81% of British firms claim that government red tape and bureaucracy is
on the increase.
The government’s initiative is led by the Better Regulation Executive, which
estimates it has saved British firms £800m by identifying and cutting back
on outdated or unnecessary legislation they would have had to spend time and
money complying with.
The executive is also working on ways of exempting the smallest firms from
some regulations. Increases in the Vat threshold, the fact that the smallest
firms no longer have to hold annual meetings and the introduction of a
common commencement date for new legislation were good examples of how some
of the compliance burden was lifted from small firms, said Sargent.
More scope for changes has been identified, according to Sargent, which should
lead to further savings. “We have a database of every piece of compliance
you have to meet as a business and we are working across that to see where
we can make cuts,” he said.
