Better Business Day and what it means for start-ups and SMEs
New start-up businesses in the UK are as abundant as ever, but issues within society, climate change, and the cost of living have proven tricky obstacles to navigate.
Today marks ‘Better Business Day’ – the launch of a campaign by The Better Business Act, which is calling for an amendment to Section 172 of the Companies Act in order to benefit start-ups and small businesses.
A growing coalition of over 2,000 UK businesses is now involved with the campaign, which will today see the Better Business Act speaking with MPs, policymakers, and business leaders in Westminster.
Why is change being called for?
Section 172 of the Companies Act sets out several duties that directors owe to a company. It requires directors to promote the success of the company so that it benefits the shareholders.
This legislation does not consider other responsibilities that a company has, including societal and environmental. The Better Business Act wants to see this amended, so it aligns social and environmental impact with shareholder returns.
Climate change is under the microscope like never before, so it is a widely popular view that the interests of people and the planet are given as much concern as those of shareholders when boardroom decisions are made.
How does this affect start-ups and small and medium-sized enterprises (SMEs)?
With Section 172 of the Companies Act, larger companies are profit driven and often prioritise quick returns for the shareholders. For start-ups and SMEs, these methods are not as feasible as they usually lack the investment and funds to achieve these short-term goals.
The above is just one example of the stumbling blocks these businesses face when being forced by this legislation to act in similar ways to much larger, wealthier companies.
Amendments to the legislation would level the playing field for start-ups and SMEs and see a greater balance between profit and purpose across all businesses around the UK.
According to the Federation of Small Businesses (FSB), SMEs account for 99.9 per cent of the business population, while in 2022, a staggering 774,420 start-ups were created. These figures show the need for equality, as these smaller companies are vital to the overall business landscape in the UK.
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