As a CEO I regularly meet up with other CEOs and discuss the issues that our businesses are facing during these turbulent times. One area that keeps rearing its head is the difficulty small businesses are having in raising funding: – Here’s my theory
I think Alistair Darling has a lot to answer for!
In increasing the tax rate to 50% for earnings over £150,000 per annum of which there are only about 300,000 people that fall into this category in the UK.
Many of these high earners are fortunate enough to enjoy reviewing and investing in small business and the Entrepreneurs of the future. Excluding the Lawyers and Accountants!
New Start-ups rely heavily on family and friends for early stage investments, an area that our Banking community continue to rule out as too risky for investment, and then often look for second stage funding from Business angels networks and high net worth individuals. According to my peers this funding is getting tougher to obtain, with many previous and potential investors citing the Tax increase as there main reason for not investing, and the increase has not even happen yet!
It is my belief that this impending tax increase will leave Entrepreneurs, with even less opportunity to obtain the early stage funding that is so critical in getting there business started and operational for the earliest stages of growth.
I hate to think what the long-term impact of these changes will be on UK business over the next 3-6 years!