Starting a Business in Britain
Introduction
The current economic environment affects all forms of business by posing risks and opportunities. In order to start a business that will guarantee success and sustainability, an entrepreneur needs to perform environmental scanning (Elliott & Stewart 2012). This will reveal the available risks and opportunities in any business environment. Many successful and global investors tend to convert the available risks to opportunities as a way of gaining competitive advantage. The United Kingdom is one of the world’s major economies that tend to attract investors. However, starting a business in the United Kingdom can be a bad or a good idea. In light of this, the study discusses the statement “In the current economic climate in Britain, the risks of starting up a business outweigh the benefits.”
Over the last decade, the GDP growth in Britain has constantly matched or outpaced growth in the entire European Union (EU) (Dimireva 2009). Similar to other major economies in the global platform, Britain’s economy contracted in 2009 before resuming growth in 2010. The contraction brought forward some effects in terms of risks to individuals starting businesses in this region of the world.
The first risk that an investor might face in establishing a business in Britain is inadequate finance (Hurley 2010). Businesses that do not have sufficient finance usually have limited expansion; in fact, they might stop their operations. In Britain, it might seem like business and banks live in parallel worlds. The banks’ quantitative data on lending levels do not concur with the evidences provided by lending businesses (Gomersall 2012). The evidence indicates that the businesses in the current economic climate have trouble in borrowing finances from banks. This shows that the credit crunch remains a reality in Britain putting businesses at risk.
It is mandatory for companies in Britain to file their annual return with Companies House (Elliott & Stewart 2012). Annual returns provide a snapshot of the primary information of a company, which include registered office address, company directors and shareholders. The submission of an annual return should be at least once a year. Failure to submit an annual return in Britain might lead to company being eliminated from the register (Gomersall 2012). This is a potential risk because it increases legal requirements for establishing a business in Britain. In addition, once the authorities strike off a company from the register, it is potentially costly and time-consuming to restore the company.
Another risk is that Limited Liability Companies (LLC) in Britain must keep their accounts open to the public for inspection (Dimireva 2009). The constitution of Britain gives legal authorities to inspect the books of account of companies. However, many companies do not fully conform to legal requirements. As such, they will bribe legal authorities. In addition, keeping the books of accounts open to the public might expose the weaknesses in the business to competitors.
On the other hand, Britain can provide a business-enabling environment to investors (Dimireva 2009). The first benefit from investing in British Economy is that it is a proven investment location (Dimireva 2009). Britain has a good record in attracting foreign investors. For example, the total stock foreign investment in 2009 was more than 1 trillion. This was the third highest level of Foreign Direct Investment (FDI) stock worldwide. From 2009 to 2010, the British economy attracted about 1600 foreign direct investment resulting in the creation of over 53000 jobs (Dimireva 2009). This proven record will significantly help investors wishing to establish businesses in the British economy.
Another benefit of investing in the British economy is that Britain has a wide export base. Britain is among the leading trading countries in the universe (Elliott & Stewart 2012). Currently, researches on economies rank Britain the fourth importer and second largest exporter of commercial services. Britain is the tenth largest exporter and the sixth largest importer of goods universally. The US imports about 17.3 per cent of Britain’s goods and services. Germany and France follow with 9 and 6.6 per cent respectively (Elliott & Stewart 2012). The European Union accounts for about 48.7 per cent of Britain’s export.
The taxation platform in Britain is extremely advantageous to business (Elliott & Stewart 2012). Britain is among the countries having relatively and lightly taxed economies in the world. The general tax burden in Britain is below the average for EU. The tax rates in Britain are below those of Germany, Netherlands, France, Belgium, Sweden and Denmark. This makes it the best destination for investment since it will make them to increase their profitability (Dimireva 2009). In addition, the low rates of taxes in Britain reduce costs of doing business, which is the reason why many investors prefer Britain to other nations.
The Information technology infrastructural landscape in Britain is another benefit to businesses in this economy (Elliott & Stewart 2012). The dependability and quality of Britain’s IT infrastructure is crucial factor for investments across all the sectors in Britain. Britain has one of the most reliable IT infrastructures in the universe. This is due to the privatization of IT companies, which has resulted in great competition and extremely low prices (Gomersall 2012). As such, businesses have the capability of choosing from a wide range of IT service providers that suit their needs.
In conclusion, according to this research paper, the benefits of starting a business in the current British economy outweigh the risks. This implies that investors should grab the opportunities in this region of the world. The risks in the British economy do not have adverse effects and, in fact, businesses can mitigate them. Some of the benefits discussed by this study include good IT infrastructure, taxation landscape and wide export base.
References List
Dimireva, I 2009, Setting up a business in the UK, viewed 21 October 2012, http://www.eubusiness.com/europe/uk/business.
Elliott, L & Stewart, H 2012, UK economy’s fall into recession deeper than expected, viewed 21 October 2012, http://www.guardian.co.uk/business/2012/may/24/ukeconomy-contracted 2012 >.
Gomersall, S 2012, UK Trade and Investment, London, viewed 21 October 2012, http://www.ukti.gov.uk/investintheuk/whytheuk/ukbusinessenvironment.html.
Hurley, J 2010, UK anti-bribery law ‘big risk to business’ , viewed 21 October 2012, http://www.telegraph.co.uk/finance/8182639/UK-anti-briberylaw-big-risk-to business.html.
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