Category Archives: hair loss

Starting a business just before the pandemic presented unprecedented challenges, especially for women, particularly Black women, who often face additional barriers in the entrepreneurial landscape. As rising costs squeeze customers’ wallets, small businesses struggle to stay afloat. The last thing these businesses need is added pressure from banks, insurance companies, accountants, and regulatory bodies. These institutions, while focused on combating organised crime and corruption, must also develop strategies that champion genuine SMEs caught in this turmoil, rather than exacerbating their struggles. Where is the support for these resilient businesses fighting to survive? Why can’t the banks walk and chew gum and the same time?

Setting up a limited company in the UK is remarkably quick and easy, often taking just a few minutes online. However, the simplicity of the initial setup can be deceptive, as it doesn’t reveal the full extent of the responsibilities and potential pitfalls that lie ahead for small business owners. Beyond the excitement of having your own company name, there are numerous regulatory obligations that can catch new entrepreneurs off guard. These include regular filings with Companies House, maintaining accurate financial records, and ensuring compliance with tax obligations—whether or not your business is generating income.

Even if your business isn’t earning money, failing to meet these requirements can result in penalties, fines, or even the risk of your company being struck off the register. For instance, filing annual accounts and confirmation statements is mandatory, and missing deadlines can lead to significant fines. Additionally, the intricacies of VAT registration, understanding corporation tax, and dealing with PAYE (if you have employees) add layers of complexity that aren’t immediately obvious when you first set up your company.

Moreover, small business owners must be prepared for potential scrutiny from HMRC, especially as the government tightens regulations to combat financial crime and tax evasion. The reality is that running a limited company involves much more than just pursuing your business idea—it requires navigating a complex web of legal and financial responsibilities. Understanding these obligations from the outset is crucial to avoiding the unexpected consequences that can arise, ensuring your small business thrives rather than gets bogged down in regulatory challenges.

I was very excited when I started my small Specialist Salon business in 2016. The aim was to trade it for 3 years, and then develop a Franchise strategy and expand the services throughout the UK. However the Pandemic put a spanner in the works, not just for my business but many others. I persevered and then came the huge utility hike, my supplier took £10,000 for 6 months supply, there was nothing I could do, it left my account depleted and I had to start trading out of my cashflow. It has been a really challenging time navigating and micro managing the finances in order to meet all the outgoings, leaning in until I could turn the corner.

The next challenge was to get all the accounts up to date, filings etc., most of the costs for accountants have become expensive and eye watering, so I had to look at ways in which I could prepare my own accounts aided by online software which I had to learn and then update in between any spare time I got.

I could see the light at the end of the tunnel, managed to bring my VAT all up to date, Get my company accounts filed and in the process of filing the corporation tax once the reference number has been received via company house.

My next focus was on increasing revenue, I started to micro advertise, enquiries just starting to come in and now my biggest challenge is with my bank Starling.

The recent scrutiny of banks by financial regulatory bodies has led to a reactionary approach where banks are now indiscriminately targeting small businesses that are late with their filings. Instead of developing systems to guide and support genuine UK businesses—many of which may be unaware of their filing obligations—banks have opted for a sweeping purge strategy. (Barclays being the leader) By threatening account closures without proper explanation or support, they have created confusion and panic among small business owners who are often unsure of what is happening and how to resolve these issues.

This approach is particularly problematic because it fails to distinguish between businesses that are struggling due to genuine reasons, such as the pandemic and rising costs, and those that may be involved in nefarious activities. Many small business owners, already stretched thin with day-to-day operations, are not equipped to navigate the complex regulatory landscape without guidance. Instead of receiving the help they need to stay compliant, they are met with threats and closures that could devastate their business.

The banks’ strategy is short-sighted and fails to consider the long-term impact on the UK’s small business ecosystem. By alienating small businesses, many of which have the potential for future growth, banks are undermining the very sector that could contribute significantly to the economy. What’s needed is a more nuanced approach that provides education, support, and a clear path to compliance, rather than punitive measures that risk driving genuine businesses into insolvency or forcing them to shut down altogether.
So I found out from a recent article highlighting Starling Bank’s crackdown on debtors following an investigation by the Financial Conduct Authority (FCA) into its financial crime controls.

While Starling justifies its actions as part of tightening financial discipline, this aggressive stance appears to disproportionately target small businesses (which was there main recruiting strategy when they launch there no physical location online solution), that may not yet be profitable but are long-standing, having survived through the pandemic and rising costs. This short-term approach by Starling Bank risks alienating small businesses that have potential for future growth, especially those that have already demonstrated resilience during challenging times. By indiscriminately pushing out these businesses without offering constructive support or alternatives, Starling Bank seems to be prioritising immediate financial metrics over long-term relationships, potentially causing harm to the broader business ecosystem.

The treatment of these small businesses, many of which have been established for over five years, raises concerns about discrimination and a lack of recourse. The bank’s actions overlook the fact that many of these businesses were severely impacted by the pandemic, which should warrant understanding and support rather than punitive measures. In essence, Starling’s approach along with other banks could be seen as merciless and unsupportive, especially for businesses still navigating the economic aftermath of the pandemic.

This strategy could backfire, damaging Starling’s reputation among small business owners who feel unfairly targeted and abandoned by a bank that once positioned itself as a champion of SMEs and built for us.

Suggested Measures:
Banks must consider the well-being of SME owners, as many rely solely on a single business account for all their financial needs. Temporarily suspending an account can have devastating effects, leaving business owners without access to essential funds for daily operations, payroll, and personal expenses. Such actions can cause extreme stress and financial instability, potentially jeopardising the survival of the business.
Banks should implement more empathetic and supportive approaches, offering guidance and alternatives rather than immediate suspensions, to ensure the financial health and stability of these entrepreneurs.

To address the issue of banks indiscriminately targeting small businesses for account closures due to missed filings, several measures can be implemented:

1. Enhanced Communication: Banks should proactively communicate with businesses about upcoming filing deadlines and offer reminders well in advance. Clear guidance on what needs to be done can prevent many issues. There is the technology to do this
2. Support Systems: Establish dedicated support teams or resources that provide step-by-step assistance to small businesses, helping them navigate the complexities of regulatory compliance. They might find that these businesses once they understand and have become use to the governance rules, that less and less support is needed.
3. Tiered Response: Instead of immediate threats of account closure, banks could implement a tiered response system, starting with warnings and offering assistance to rectify the situation before taking drastic measures. They need to be clear about the problem instead of hiding behind confidentiality rules.
4. Education and Training: Banks could partner with regulatory bodies to offer workshops or online training sessions for small business owners, ensuring they understand their obligations and how to fulfill them when they have set up a limited company, Enterprise company, not for profit or charity organisations.
   
   The importance of having qualified banking staff available to address issues related to account compliance cannot be overstated. While customer service representatives play a crucial role in general inquiries, complex regulatory matters require expertise that goes beyond basic customer service training. Qualified banking professionals possess the knowledge and experience necessary to navigate the intricacies of financial regulations, offering tailored advice and solutions to small business owners. Without access to such expertise, customers may receive inadequate or incorrect guidance, exacerbating their problems and potentially leading to severe financial consequences. Ensuring that qualified staff are accessible is vital for maintaining trust and helping businesses remain compliant without undue stress.
5. Temporary Relief Programs: For businesses in distress, especially those with a long track record, banks could offer temporary relief or grace periods instead of immediate account suspension. Flexible Penalty Structures: Implementing a more flexible penalty structure that considers the size and history of the business can prevent unnecessary closures while still encouraging compliance.
6. Advocacy and Representation: Banks should advocate for small businesses with regulators, helping to ensure that compliance requirements are reasonable and that businesses have a clear path to meet them.

By adopting these strategies, banks can better support small businesses, ensuring they remain compliant without resorting to punitive measures that could harm their operations. This approach would foster a more supportive environment for small businesses, which are vital to the economy.

Here are some alternative solutions to address the issue of banks targeting small businesses for account closures:

1. Third-Party Mediation: Introduce independent third-party mediators to assess disputes between banks and small businesses, ensuring that decisions are fair and consider the specific circumstances of each business.
2. Government Intervention: The government could step in to create standardised guidelines for banks to follow when dealing with non-compliant businesses, preventing arbitrary closures.
3. Regulatory Sandbox: Establish a regulatory sandbox where small businesses can experiment with compliance strategies without the fear of penalties, allowing them to learn and adapt in a supportive environment.
4. Tailored Compliance Plans: Banks could work with small businesses to develop individualised compliance plans, setting realistic timelines for achieving full compliance without threatening immediate closure.
5. Collaborative Platforms: Create collaborative platforms where small businesses can access shared resources, tools, and expert advice, helping them stay compliant and avoid penalties.

These alternative solutions focus on creating a more supportive and cooperative environment, where small businesses are given the tools and guidance they need to succeed, rather than being penalized without adequate support.

In conclusion, the recent actions by banks, particularly the indiscriminate suspension of SME accounts, underscore a critical need for a more nuanced and supportive approach to banking in the small business sector. While banks must adhere to regulatory requirements and combat financial crime, their strategies should not inadvertently harm legitimate small businesses that are crucial to the economy. For many SME owners, their business account is not just a financial tool but a lifeline that supports both their personal and professional lives. The temporary suspension or closure of these accounts can have devastating consequences, exacerbating financial stress and potentially leading to business failure.

Qualified banking professionals, with a deep understanding of both regulatory obligations and the unique challenges faced by small businesses, should be readily accessible to provide guidance and support. This approach would prevent unnecessary disruptions and help SMEs navigate compliance issues effectively. Additionally, banks must recognize the well-being of SME owners, offering them the understanding and flexibility needed to maintain their operations, especially in the face of rising costs and economic challenges.

A shift towards a more empathetic and customer-centric banking model is essential. By doing so, banks can foster long-term relationships with SMEs, supporting their growth and contributing to a more resilient and thriving economy.