Small business owner considers selling firm amid minimum wage increase
Christina French, founder of an electrical contracting business, fears she will have to sell one of her businesses to make ends meet.
A small business owner said she is “considering selling” her firm after the Government announced it will be increasing the national minimum wage in the Budget.
Christina French, 42, from Birmingham, is founder of Diverse Sparks Limited, an electrical contracting business, and fears she will have to sell this business to make ends meet.
She is also co-founder of a start-up manufacturing firm, which she does not intend to sell but said she will be forced to find ways of keeping the business afloat.
Ms French watched the Budget closely on Wednesday, which saw Chancellor Rachel Reeves announce the national minimum wage will rise by 6.7% to £12.21 an hour after asking the Low Pay Commission to take the “cost of living” into account.
The rate of employers’ national insurance (NI) will rise by 1.2 percentage points, from 13.8% to 15% from April next year and the secondary threshold – meaning the level at which employers start paying the tax on each employee’s salary – will also be reduced from £9,100 a year to £5,000.
The business owner described the changes as “rubbish” and “awful” for sole traders.
“I’m considering selling the business now,” Ms French told the PA news agency.
“It’s just awful. My wage is the lowest. As a business owner, I get £500 a month, and I’ve run that business 18 hours a day for the last 12 years.
“But in order to give my staff work and keep them with a job, I take the hit. Where does it leave me now as an owner and where does it leave my staff?”
She said she is concerned she will need to increase her prices, which could drive away her customers.
“You’ll have sole traders that will be able to charge less so we’re unable to put our prices up,” she explained.
“We’ve already tried that this year to go in line with inflation and it gave us difficult patches.
“I don’t see an outcome of being able to increase my prices so that I can pay my staff.”
She added she may lose loyal customers and fears they might “start searching around for people who are cheaper and this is where you’re going to have a reduction in standards”.
Ms French said she is “passionate about having apprenticeships”, but felt disappointed the Chancellor did not mention the support for apprentices in the Budget.
“It’s rubbish because I’ve created jobs and apprenticeships for the last 12 years, and now that’s not going to be an option for us,” she said.
“The one I’ve got at the moment will be the last apprentice that I can take, so it’s pretty sad.”
She fears small businesses offering apprenticeships “are not going to provide that opportunity” and believe it will become “more difficult” for people to get into skilled work.
“I get so many applications for apprenticeships because there’s just not enough jobs out there as it is,” she said.
“It’s all good and well increasing the minimum wage, but then businesses aren’t going to be able to help to provide those jobs, so it’s going to be a vicious circle.”
Meanwhile, Alan Stone, 60, an antiques and secondhand jewellery shop owner said he feels “totally hammered” by the Budget.
“I employ 13 staff, which puts me into the category of being totally hammered by that Budget,” Mr Stone, from Basingstoke in Hampshire, told PA.
“I know there’s a couple of tax breaks which make might make life a little bit easier, but it looks like I’m going to be one of the ones hit the hardest.”
He criticised the Government’s decision to increase employers’ NI contributions and said he may be forced to let go one of his employees.
“I hate doing things like that because you’ve got less staff and you get less work done,” he said.
“The national insurance contribution is going to hit me hard because I don’t get the relief (Labour) are talking about. It’s going to cost me a significant amount of money a month.
“We were already being clobbered with the highest rates of taxation for decades by the Conservative Party, and it’s just gone up.”
He fears the new measures will affect investment in the UK and force the Government to seek investors abroad.
“With the increased borrowing and the higher taxation, I think we’re going to be scaring investments away from the country,” Mr Stone explained.
“We’re certainly going to be scaring inward investment from smaller companies like myself, who may not now want to improve their businesses to a point where they’re a commercial thing to sell on when they retire.
“The high taxation on that is going to be a big problem. I think it’s going to only attract foreign investment over the country that can concentrate some of their taxes abroad.”
Mr Stone insists he will not change his prices to avoid customers feeling the brunt of increased costs.
He said: “I can’t increase my charges to customers. All of them are going to have to come out of the direct bottom line profit of the business.”
