Generations have been promised that a University education, a decent suit and a willing attitude would land you a job and a decent white-collar career. Lattes and cheese plants aplenty.

Although the proportion of young people with a degree is now 60%, the UK is seeing rising unemployment rates, especially among young people. Finding a job in the current job market can be endlessly dissatisfying with hundreds of applications and no response.

I work with SMEs in Hackney, East London. How is all the adoption of AI going to affect entry level jobs? And work in general? What can we learn from previous patterns of automation?

The Bad News First

In the UK, proposed mass dismissal programs rose by 5% in 2024/25, involving over 267,000 proposed redundancies. UK businesses accelerate layoffs amid AI surge and legislative uncertainty. Full adoption of generative AI could save nearly 24% of private-sector workforce time, equivalent to the output of 6 million workers. Predictions are that nearly 40% of global employment will be affected by the end of the decade. The Impact of AI on the Labour Market

White-Collar Worries?

The Centre for AI and Digital Policy (CAIDP), a US non-profit research organisation, produces its report on global AI policy every year. Here’s a summary of the CAIDP’s 2025 Index on which job roles will benefit from AI automation and which will suffer. The word clerks keeps coming up – lower-skilled, administrative roles i.e. the first step on the corporate ladder. CAIDP Index 2025 – Center for AI and Digital Policy

Tomorrow’s World – Speed, Control and Service Improvements

Imagine it’s the early noughties. The introduction of self-service tills, along with the promise of no more queuing. You would now be in control of your own shopping experience, could scan and pack your own bags at your own pace, and do so privately without feeling undue pressure. Based on the estimates at the time, what would cost the supermarket £2.50 in staff costs would now cost them 15 pence, with the implication that prices would also be affected. You’d soon be waiting less and spending more for your weekly shop.

Even the staff are about to be liberated from monotonous and repetitive tasks. They will take on more supervisory roles and had more flexible interactions with customers.

A 2003 Nielsen survey found that 52% of shoppers considered self checkout lanes to be “okay,” while 16% said they were “frustrating.” Thirty-two percent of shoppers called them “great.” Nobody likes self-checkout. Here’s why it’s everywhere | CNN Business

The Paradox of Automation – Worse All Round?

“It hasn’t delivered anything that it promises …. Stores saw this as the next frontier… If they could get the consumer to think that [self-checkout] was a preferable way to shop, then they could cut labour costs. But they’re finding that people need help doing it, or that they’ll steal stuff. They ended up realising that they’re not saving money, they’re losing money.” Christopher Andrews, Associate Professor and Chair of Sociology at Drew University, USA.

A 2025 Serve Legal study found 37% of shoppers admit to stealing at self‑checkouts, contributing to retail crime losses of £4.2bn annually. As supermarkets removed manned tills and pushed self‑checkout, more shoppers reported waits up to three minutes or more instead of no queue.

Studies of over 6,000 workers cited by The Grocer describe high stress, abuse from frustrated customers, and a sense that front‑end staffing levels are no longer sustainable. Proof that self-checkouts are causing a decline in customer service | Comment & Opinion | The Grocer

Only 10% of customers (from a 300 UK customer sample size) want more automation in store (research conducted by GetApp in February 2024) UK survey shows self-checkouts top store automation technologies

So Why Do They Still Exist?

Supermarkets typically operate on a 3% profit margin. After billions of pounds in investment in the technology, the promised savings of replacing labour with automated tills are not there. Include shoplifting, security and reputational effects and the margins are tight but, crucially, there are there. There is still a margin of profit.

As competitors have all installed the technology to seem equally interested in their customers, there’s not really any alternative so, even after a poor experience, you can’t vote with your feet and shop somewhere that hasn’t converted to self-service.

And We’ve Gotten Used To Them …

Stores today are catering to shoppers who perceive self-checkout to be faster than traditional cashiers, even though there’s little evidence to support that. But, because customers are doing the work, rather than waiting in line, the experience can feel like it’s moving more quickly. Nobody likes self-checkout. Here’s why it’s everywhere | CNN Business

According to the GetApp survey mentioned earlier, consumers are now positive about self-checkout tills:

• 69% of respondents would rate their experience with self-checkouts good to excellent.
• 73% who use self-checkouts stated they plan to continue using them in the future. 
• Over three quarters (78%) agreed that their encounters with self-checkouts have improved over the last 5 years.
• 73% claim self-checkouts add efficiency to their shopping experience.

UK survey shows self-checkouts top store automation technologies

The Pattern of Adoption

Margins vs Marginalisation

Of course, not everyone has accepted the automation of everyday life tasks. Consider how automation can instead become exclusion. In the 10 years since 2013/14, the estimated number of disabled people in the UK has increased by 4.9 million. Among 16 to 24 year olds, there are twice as many reporting as disabled, increasing from 8% to 18%. UK disability statistics: Prevalence and life experiences – House of Commons Library

Imagine you want to use a Self-Service checkout and you have a visual impairment. You have to use a touchscreen, there is no headphone jack for headphones to have a voice explain what you can see, the flat screen does not provide any tactile means to identify where you should press. Or you have a motor impairment. Cramped self-service areas. Wheelchair users cannot reach up and forwards enough, scanning requires precise movements, machines freeze if there’s a delay.

The Reality Of Automation

“I have MS and am in a wheelchair, and find it almost impossible to use the automated tills. I find it hard to juggle everything on my lap — purse, handbag, unwieldy basket, various cards — and very difficult indeed to scan and move the shopping fast enough. The first time I tried to do it, the assistant was busy and I sat there, holding everyone else up, waiting for her to help. I find these machines very upsetting because effectively they stop me from going shopping.” Linda Riordan, 60

“I have Parkinson’s disease and loathe automated tills. They are demoralising and make me feel stupid. Parkinson’s affects everyone who has it in different ways, but very often the tremor gets worse if you feel stressed or upset … I only ever use them when I’m absolutely forced to. I would rather queue halfway around the shop for a manned checkout.” Lin Merchant, 64

In 2024, several major UK and US retailers began reintroducing manned tills specifically because of feedback regarding accessibility and the “unfriendly” nature of automated lanes for vulnerable customers.

The Jevons Paradox

So, where are we on the AI automation of white-collar work?

Delving deeper into the CAIDP’s 2025 Index, we see the expectation of a gentler transition than the headlines might suggest. Enter the Jevons Paradox. This states that as a service or resource becomes more efficient, the overall demand for what it creates rises.

LED lights are more efficient. Older lights are replaced but new LED lights displays on signs or other media have been introduced. The fact they’re cheaper means there are more of them.

AI makes coding and software creation significantly cheaper and faster. What happens? More software, more tailored offers and more use cases. And this creates new specialist roles. The transition is less sudden and cliff-edge and more gradual as companies learn the skills to use AI competently and humans are employed to manage the areas it can’t handle or needs supervision for.

“It’s certainly the case right now… that the human-AI combination, the ‘cyborg,’ is superior to AI alone.” — David Oks, Essayist

Human institutions are slow to adapt and change to new technologies. I interviewed a Finance Director in a niche sector several years ago and he told me there was still a niche part of taxation where the form had to be sent by fax. They still had a working fax machine. Yes, AI is faster in its lane but it can’t comprehend the distinct personality of a company’s management structure and how Brian likes his folders labelled.

What Does This Pattern Of Adoption Predict?

Step 1.

AI is a new wave of automation. It promises to do the repetitive, resource-heavy tasks you hate for you and free you up for more satisfying work.

We will see an acceleration of adoption among the companies who can afford large-scale AI investment. Recruitment among big companies will slow or freeze. However, initial hopes of significant profit leaps will not materialise.

Case Study – Klarna’s AI Agent

At the leading edge, Klarna (the digital bank with the buy-now-pay-later instalments feature)have claimed its AI customer assistant does the work of 853 full-time agents and this saves them $60 million a year. However, overall customer service and operations costs were slightly more year-over-year ($50M vs $42M in Q3 2025). Klarna Investor Relations, “Q4 2025 Results & Strategic Update,” Feb 19, 2026. They have halved their workforce since 2022 as their revenue has doubled. Klarna Group plc – Klarna Accelerates U.S. Growth and Delivers $1bn Revenue Driven by Rapid Banking Service Adoption

However, cost savings were masking an underlying issue. A quarter of the customers with resolved issues were coming back. Their problems still existed after all. The company have now pivoted as of February 2026 to a model that re-introduces a human for more involved or high value queries.

Klarna Saved $60 Million with AI. Then It Had to Rehire the Humans.

In May 2025, in a Bloomberg interview, Klarna CEO Sebastian Siemiatkowski admitted: “As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality … Really investing in the quality of the human support is the way of the future for us”.

Step 2.

It seems to me we’re still at early Step 2.

For most people in most work or office situations, AI certainly helps but the quality of the results is poorer than expected. Over-reliance on what AI can be trusted to do causes issues down the line.

Partly, this is because we haven’t been trained how to use it well enough and partly because the AI models aren’t reliable enough.

What Have We Learned?

The AI automation of repetitive administrative work is not a wholesale replacement of white-collar clerical workers. At least not yet. Instead, it’s a way to build efficiency into the admin work being done so that employees can achieve and produce more with less human resource.

Traditional ways of working take time to adapt and add blockers even when companies do want to automate. People don’t trust new technologies. The change will be more gradual and will probably a decade or two.

What it does mean is that new clerical roles will stall. The need for new entry level and junior roles is where the change is taking place.

However, new roles in quality assurance, AI agent management and software development will also be created.

SMEs with specialist skills can fill the gap that a drop in entry level roles will leave behind. Tailored software solutions or management services will offer businesses alternatives to developing new staff. This out-sourcing of talent and responsibility will become more attractive as the risks of AI become more apparent. But that’s a future blog.

If you want to find Clarity and enjoy research-based customer insights, Clarity offers in person customer interviews for SMEs in Hackney. We offer a package of 5 half hour interviews per month and promise 5 actionable insights from each interview, providing you with authentic, independent customer feedback and a suite of marketing materials to build your reputation and word of mouth referrals.

The post The Future of Work – Less Admin, More AI? appeared first on Clarity.

• Hospitality
• Retail
• Logistics and distribution
• Creative industries
• Social care

Or, perhaps you are using an agency to supply workers when you need them? They might be on zero hour contracts (ZHCs). As you know all too well, workload varies throughout the year e.g., Black Friday, or it’s based on winning tenders so a big win means all hands on deck for a short but accutely busy period.

From April 2027, the flexible labour market is going to change. The Employee Rights Act came into law in December 2025. This blog is the first part of a series dealing with the impacts.

I work with SMEs in Hackney. The Borough has strong hospitality and creative sectors so, when I heard about the end of ZHCs as we know them, I did some research …

Did The Government Just Ban ZHCs?

In 2015, 10 years ago, the Labour Party pledged that they would “introduce a right for those working under ZHCs to request a “standard” contract from employers after 12 weeks“. Labour re-introduced this promise in the New Deal for Working People in 2023 (see banner image above taken from ). And in 2024: “Labour will end ‘one sided’ flexibility and ensure all jobs provide a baseline level of security and predictability, banning exploitative zero hours contracts“.

Last December, the Employment Rights Act became law.

This is the first part of the Plan to Make Work Pay – a labour market shift with 70 separate measures to make finding, keeping and progressing in work in the UK more stable, predictable and productive. 28 of those measures have now made it into law. The first changes come into effect from April this year (see the box below ‘Phase One’).

In anticipation of the Bill becoming law, in November 2024 the FSB surveyed their members to find that 67% would recruit fewer staff as a result. Exactly 0% said they would consider employing more staff as a response. 24% said that they would try to automate in an effort to reduce the number of staff.

80% of British SMEs say the Employment Rights Bill is a positive step forward for staff.

In August 2025, BreatheHR asked 500 UK SMEs about their feelings. 68% of SMEs surveyed felt that there would be a positive impact on staff productivity. However, 61% felt there would be a significant increase in the time and effort it will take to manage the changes.

What Does The Act Say About ZHCs?

The Act places significant restrictions on ZHCs.

It does not “ban” ZHCs, but it gives workers who have worked a regular pattern for a set period (probably 12 weeks) the right to request a predictable working pattern. Employers can only turn down that request on very specific grounds.

Importantly, this measure includes agency workers.

“The Bill has the potential to lift 1.2 million people out of severe insecurity at work, and improve job security for nearly four million workers.” Ben Harrison, Director of the Work Foundation at Lancaster University

What Does The Government Mean By Exploitative ZHCs?

Workers complain they are “struck off” shifts for taking too many toilet breaks. Some report finding bottles which colleagues have used to pee into to prevent them having to leave their station. Staff report searches as they leave to ensure they have not stolen anything but that the time it takes, up to 15 minutes per shift, is unpaid.

Others report employers cutting shifts short if business is slow. and only paying up to the time they finish or the opposite – facing undue pressure to work last minute shifts when demand is high.

Some high profile employers like Sports Direct and JD Wetherspoons now offer guaranteed hours but a quick search online finds that there are still cases where a manager asks an employee to use their holiday during quiet times. Or, they do not work their guaranteed hours and do not get paid.

“You can think of it in terms of it being employer-driven or worker-controlled flexibility, but, for the worker, it’s really experienced as insecurity,” says Dr Alex Wood, an assistant professor in economic sociology at the University of Cambridge

How Did We Get Here? The Current Labour Market

In 2006, the Office of National Statistics suggested that fewer than 150,000 workers were on these kinds of demand-driven, “If there’s work available, we’ll give you a call,” contracts.

Then came the financial crash of 2008. The recession that followed led a lot of businesses to do everything they could to reduce their costs. They didn’t want employees on the books with little work available to keep them busy. Flexible work became more popular while, at the same time, the government was keen to keep unemployment figures low (see the box, No Work Makes Jack a Dole Boy)

As of early 2026, about 1.2 million people in Britain are reliant on casual contracts to earn a wage. There are now 508,000 young workers aged 16-24 on ZHCs. This is the highest level on record.

Statista.com

“We’ve got 15 million people living in poverty in Britain – over half of whom are in work.” Paul Nowak, Trades Union Congress (TUC), Oct 2024

What Is The Guaranteed Hours Offer (GHO)?

In 2023, 92.5% of ZHCs workers would have qualified to be offered guaranteed hours.

Employers must offer a guaranteed hours contract to workers on zero-hours or “low hours” contracts if they regularly work more than their contracted hours. Some details are not yet confirmed e.g., the definition of ‘consistently working’. Employers can, however, still provide fixed term contracts.

Rights against dismissal after 6 months:

Employers can no longer use ZHCs as a ‘de facto’ probationary period. Related to this is another part of the Act. From July 1, 2026 new employees gain full protection against unfair dismissal if they are still employed on January 1, 2027. Employers will not have the traditional two-year period to assess whether to offer a full-benefits contract.

An ‘opt-in’ for stability:

Eligible workers have the right to request or accept these guaranteed hours, but they are not obligated to do so; they may choose to remain on a ZHC if that flexibility suits their personal circumstances. When JD Wetherspoons trialled their guaranteed 70% of average hours contracts in 2016, at least two thirds took them up. Recent reports (2024/2025) indicate that 96.6% of hourly-paid staff are now on guaranteed-hour contracts.

Shift predictability:

Workers must be offered reasonable notice of shifts (probably 7 – 14 days with trade unions lobbying for at least 2 weeks), with compensation if a shift is cancelled, moved, or shortened at short notice. For ‘reasonable notice’, based on European trends and Acas recommendations, anything less than 7 days will be hard to defend.

Extension to Agency Workers:

All the new rights regarding guaranteed hours and shift notice will also apply to agency workers.

Anti-Avoidance Protections:

The Act includes provisions to prevent employers from intentionally limiting a worker’s hours during the reference period to reduce the average. The Fair Work Agency begins its work this April. They will have the power to require action from an employer, to enter premises and access files and computers, to bring tribunal action on behalf of an employee and to issue notices of payment and penalties. Employers will be able to appeal to an employment tribunal.

Phase One – April 2026

Many existing entitlements only available to employees after a period of service will become “Day One” rights:

• The right to Statutory Sick Pay (SSP) from the first day of sickness. No more Lower Earnings Limit for the receipt of sick pay.
• The right to Paternity and unpaid Parental Leave.
• The right to at least one week of Bereavement Leave. An expansion to include pregnancy loss before 24 weeks.
• The enhanced right to protection from dismissal for Maternity and up to 6 months after returning to work.

What Do SMEs Need To Do Now About Their ZHCs?

If you’re offering ZHCs, many of the administrative and compliance burdens are the same whatever the size of your business. If you do not have a dedicated HR function,you will face more risk of ‘vexatious’ claims. This is due to an expansion of employees’ rights and a shortening of full-benefit timeframes.

• You will need to track hours worked precisely and get ready to manage ‘guaranteed hour offers’.
• Start monitoring shift patterns and how regularly flexible workers receive shifts over 12 week periods to understand what your responsibilities will be.
• Give clearer and earlier notice of shifts. Begin to provide at least seven days’ notice for shifts to avoid the risk of compensation claims cancelling shifts late.
• Train managers or Team Leaders on how the new requirements affect shift allocations and shift changes.

Retail And Hospitality Focus

Trade body UK Hospitality says that 17 per cent of workers in the sector are on ZHCs – the highest proportion of any industry – and that research suggests these contracts are the desired way of working for the majority of people who are on them.

“Hospitality businesses have absolutely no more capacity to absorb costs and the Government must not increase the sector’s cost burden once again.” UK Hospitality, July 2025

In October 2026, new laws on transparency around employer tipping policies come into effect. Employers must consult to create a first draft and must review the policy every 3 years.

Add to this the changes to National Minimum Wage and business rates (see my blog on the Autumn Budget), the sector is facing a huge amount of pressure.

No Work Makes Jack A Dole Boy

For a long time, unemployment stayed at surprisingly low levels. In 2019, just before the pandemic hit, unemployment was around 3.6% of the UK’s available labour pool.

However, the low percentages were only half the story. Studies of this trend conclude that the results were a focus on getting people into any kind of work rather than matching them to quality work. The majority are helped into find low-paid, high-volume employment sectors e.g. supermarkets, social care, warehouse work.

Prospects for advancement are low – a measly 15% of low-paid workers escape this low-pay trap. Roughly a quarter of the whole labour market face a cycle of periods of finding a job followed by periods of unemployment.

Macrotrends.net

APPetite For Change: ZHCs And The Gig Economy

What are the likely results to be of this change? A greater flow of people to the gig economy. Typical examples are delivery couriers, ride-hailing drivers, parcel couriers, on-demand cleaners, carers and handymen. Some hospitality and retail shift‑workers are already booking in via apps, thereby volunteering for single shifts, jobs, or tasks.

There is still an appetite for hiring on flexible, insecure contracts. Will the raised minimum requirements for all employers encourage them not to employ at all? Instead, could they move to gig platforms instead?

“The side effects could be, potentially, that instead of having lots of people working fewer hours, you’ll have fewer people working more hours. That puts a bigger burden back on the state if more people are unemployed.” Simon Fennell, Shoosmiths

Will smaller teams work permanent contracts?

Will employers expect work to be completed in unpaid overtime?

Unspoken pressure from employers not to accept GHOs?

One thing everyone seems to agree on – we are going to see businesses restrict their recruitment and, where possible, reduce their headcount. Whether the security that these new contracts gives leads to productivity, growth and more jobs to be filled remains to be seen.

If you want to find Clarity and enjoy research-based customer insights, Clarity offers in person customer interviews for SMEs in Hackney. We offer a package of 5 half hour interviews per month and promise 5 actionable insights from each interview, providing you with authentic, independent customer feedback and a suite of marketing materials to build your reputation and word of mouth referrals.

The post Have the Government Just Banned Zero-Hour Contracts? appeared first on Clarity.

Can SMEs really win big government contracts? Here’s how …

SMEs make up 99% of all UK businesses and employ 16 million people but they win a tiny sliver of a share of government contracts. Though they may have a small team, they have potentially game-changing local insight. Now, public contracts are becoming more available. SMEs and VCSEs have a chance to get more involved in higher profile, more consistent, well-paid work. This is where Supply Connect comes in.

Have you heard of Supply Connect?

It’s unlikely that you have but, according to the numbers, you’ll be interested. Enterprise Nation research showed that 51% of SMEs surveyed wanted to win government contracts, 40% need support to do so but 23% had never heard of any such training being available. Supply Connect is the key to unlock all this SME potential.

I noticed the launch last October. As a researcher who’s interviewed hundreds of small businesses and partners with them to help them grow, I am interested to see what’s happening and how it’s all meant to work. Here’s what I found out …

The Tier 1 Club

Government contracts are, by definition, large and their performance scrutinised. This leads to more rules and greater answerability. Perhaps naturally, then, contracts are often awarded to large, trusted partners. As an example, prison contracts worth £1 – 4 billion are open to a shortlist of just 6 suppliers. These major players are the Tier-1s. These big projects often require local knowledge and insight so the Tier-1 organisation breaks them up and offers them to its supply chain. These subcontractors are the Tier-2s.

What about SMEs who aren’t in the current supply chain?

Turns out there hasn’t been much room for them. Lynne Copp, and her SME The Worklife Company won a Challenge Fund contract for work life balance, leading to 5 years of consistent, national growth in the early 2000s, “We had a brilliant contract with the government, the Challenge Fund for worklife balance managed by Tier-1 PwC. We worked as a Tier-2 supplier for about five years… They had about 40 SME organisations approved on the Challenge Fund supplier framework.”

Even with such a positive experience, more recently she has found that there are higher barriers and less transparency in the process. Who is the appointed Tier-1 supplier? Who is able to apply for the Tier-2 contracts? How? Her business model had to adapt as access narrowed. She said, “It’s usually word of mouth. The Tier-1 suppliers for the NHS, I can’t get on because I’m a one-man band. They want the big six and that’s it.”

Opening the Door

After the UK left the European Union, there was a chance to revisit how the government awarded public contracts. New rules were needed and thus the Procurement Act 2023 came into being.

It made a slight but significant change to the wording of the previous regulations. Whereas before the contract would be awarded to the “most economically advantageous”, now it would go to the “most advantageous” tender. Notice the loss of ‘economically’.

From 2025, public contracts should be awarded where it would create the most value and not based on who would save the most money

What was the intention behind the change? A broader definition of what public contracts were trying to achieve. From 2025, contracts are to be awarded where it would create the most value and not based on who would save the most money. 10% of the weighting from contract tender scores is now linked directly with Social Value.

What is included in Social Value?

Any business who wanted to win public contracts now have to prove they are sufficiently skilled, resourced, insured, digitally secure, fiscally robust and everything in between for the part of the contract they were tendering for. Contractors will write tenders but not solely with Tier-1 national company capacities in mind. This was to be the end of requirements that most SMEs couldn’t dream of meeting e.g. proofs of hundreds of thousands of pounds in cash flow or insurance.

In addition, there is a new focus placed on how interested businesses are contributing to their communities, fostering initiatives for community integration and considerate of the environment. Think local sourcing, local employment, local apprenticeships and training.

Supply Connect spells the end of tendering requirements that most SMEs couldn’t dream of meeting

The Social Value Model

Here’s the Social Value Model as published by the Cabinet Office and introduced in February 2025:

For all but the biggest contracts, Central Government now have to choose at least one of the above outcomes and ensure a question related to that outcome is included in the tender.

Laying the Supply Connect Red Carpet

To achieve this, there are organisations who will train and prepare engaged SMEs. From October 2025, the Supply Connect programme would offer tailored training, Meet the Buyer events, and, once approved, access to digital supplier platforms.

Who’s running Supply Connect and how?

Enterprise Nation are leading the programme, developing the digital supplier hub and resources, and advocating for SME involvement.

Newable provides specialist support, including tailored business advice and mentoring, organising and running the Meet the Buyer events.

MSDUK, WEConnect International, and OutBritain are also partnering to support inclusion and diversity.

Funding comes from the UK Government’s £2 billion construction and housing fund as well as £1.2 million of JP Morgan Chase’s £40 million commitment to UK business growth.

Oversight will be the responsibility of the new Cabinet Office body, the Procurement Review Unit (PRU). Within that, the Public Procurement Review Service (PPRS) will deal with complaints, the Procurement Compliance Service (PCS) conducts formal investigations and will offer recommendations and remedies, and the Debarment Review Service (DRS) will maintain a list of excluded organisations. The PPRS replaces the previous Mystery Shopper service for complaints.

What evidence is there that this partnership will work?

• Enterprise Nation and Newable have been working together already. Commenting on Newable’s successful partnership with Enterprise Nation to offer the Help to Grow: Management (HtGM) course and associated mentoring, Chris Manson, CEO of Newable, said: “Helping small businesses to grow is at the core of Newable’s mission.” “An independent evaluation by Ipsos and the Institute of Employment Studies found that 91% of participants would recommend Help to Grow: Management to other business leaders.”  91% of Help to Grow: Management completers recommend the course
• Andrei Ceteras, Managing Director of Surrey-based care provider MedUKCare, completed the course at Kingston Business School. He said ‘I owe a lot of my company’s success to the Help to Grow: Management Course. I managed to double my workforce from 5 to 10 people and increase my revenue by 250% in 1 year.’ 

Getting Your Name on the List

Rather than having to fill out an exhaustive and inscrutably worded questionnaire, SMEs will need to make the grade and meet the Supply Connect Standard. What does this involve?

Before tendering for any contracts, SMEs will need to prove they are already Day One ready.

Step One

Register to be a member of Enterprise Nation. Register for Supply Connect.

Step Two

Fill out your business profile. These are general questions about the size and nature of your business.

Step Three

The “Digital Readiness” Audit. Entry begins with a diagnostic questionnaire as well as submitting your business documentation. This will ask you what support or training you think you might need as well as your confidence level when it comes to bidding.

Which documents need to be provided?

• Registered Business or Charity (Not-for-profit) Status. Note that self-employed individuals are able to apply but registered organisations are preferred.
• Organisational Policies:
  • Safeguarding
  • Equality and Diversity
  • Data Protection
  • Health and Safety
• Certifications: Any ISO standards; ESG (Environmental, Social, Governance) certification. Note you may require a cybersecurity certificate.
• Insurance: All relevant policies.
• Financial Health: Including details of cash flow capacity.
• Capability Statement: A concise summary of the organisation’s services, client history, and evidence of previous results.

Step Four

Verification. Your profile is scored. You receive A personalised training plan to help you hit the sufficient ‘Contract-Ready’ standard. You can begin to meet with advisors, work with mentors and attend events in line with the recommendations.

Once you have received confirmation that you qualify, you can move on to Step Five.

Step Five

“Meet the Buyer” Matching. You’ll receive alerts of opportunities you can bid for. The “Supply Connect Hub” matches your profile with specific buyers. If you get a match, you can choose whether to express interest. Win the bid and you can move to Step Six. If your bid fails, you should receive feedback to explain what changes you may need to make to qualify.

At this point, there are two different kinds of contracts:

• Frameworks are one-time contracts offered to a fixed roster of suppliers for the duration, which is typically around 4 years (see Step Six). The Adult Social Care (Supported Living & Residential Care) contract is an example.  
• Dynamic Purchasing Systems (DPS) use afully electronic system for common goods and services. New suppliers who meet the selection criteria can join a DPS at any point during its life. An example is the London Borough of Hackney’s Temporary Accommodation DPS , valued at £198 million.

Step Six

Framework Induction. A 6-to-12 month window to introduce you to the requirements of the framework, including its pre-agreed pricing terms, KPIs, and conditions. These Framework agreements set out the pre-approved terms for all future mini-contracts (“call-offs” or “requirements”) for individual purchases of products or services.

For DPS, you may need to complete a final electronic sign-off to accept the official terms and conditions.

Spotlighted Industries

Although Supply Connect is intended for all public services, there is an initial focus on 3 ‘Pathfinder’ sectors as a test of concept. Interested SMEs will be helped to become contract ready for the following contracts.

Pathfinder Sectors

Public Contract Portals

FAQs

What is Supply Connect?

Supply Connect gives Hackney SMEs a structured, low‑cost route to become “Contract Ready” for public sector work and be actively matched to real contract opportunities, rather than being left to decode complex portals alone.

What does meeting the Supply Connect Standard bring me?

Tier‑1s and public buyers can now find and invite qualifying SMEs to work with them. Tenders include a minimum 10% weighting for social value (favouring local employment, community impact and greener practices that many Hackney SMEs already deliver but have never formalised).

What help is available?

Enterprise Nation and Newable are delivering tailored diagnostics, documentation checks and mentoring via the Digital Readiness audit and “Meet the Buyer” events. Supply Connect helps SMEs prepare standard policies, insurance, financials and capability statements once, then reuse them, so even small teams can be more competitive.

Opportunity knocking?

For your Hackney SME, there is opportunity here. Many local SMEs and VSCEs are already engaging with communities, addressing domestic issues, using locally supplied food, and reducing waste. Many of these skills, if explained and evidenced well, could mean that public contracts are available – contracts that are well-paid and have a long-term lifespan of at least 4 years. This gives SME owners stability and potentially some breathing room from sales activity to focus on expanding your organisation’s skills. Registration is free, as are the training opportunities and assistance with paperwork. Instead of repeatedly completing the same information on smaller, independent bids, Supply Connect puts your name on the list. It’s a means of pre-qualifying your business for future opportunity.

FAQs

What is Supply Connect?

Supply Connect gives Hackney SMEs a structured, low‑cost route to become “Contract Ready” for public sector work and be actively matched to real contract opportunities, rather than being left to decode complex portals alone.

What does meeting the Supply Connect Standard bring me?

Tier‑1s and public buyers can now find and invite qualifying SMEs to work with them. Tenders include a minimum 10% weighting for social value (favouring local employment, community impact and greener practices that many Hackney SMEs already deliver but have never formalised).

What help is available?

Enterprise Nation and Newable are delivering tailored diagnostics, documentation checks and mentoring via the Digital Readiness audit and “Meet the Buyer” events. Supply Connect helps SMEs prepare standard policies, insurance, financials and capability statements once, then reuse them, so even small teams can be more competitive.

Opportunity knocking?

For your Hackney SME, there is opportunity here. Many local SMEs and VSCEs are already engaging with communities, addressing domestic issues, using locally supplied food, and reducing waste. Many of these skills, if explained and evidenced well, could mean that public contracts are available – contracts that are well-paid and have a long-term lifespan of at least 4 years. This gives SME owners stability and potentially some breathing room from sales activity to focus on expanding your organisation’s skills. Registration is free, as are the training opportunities and assistance with paperwork. Instead of repeatedly completing the same information on smaller, independent bids, Supply Connect puts your name on the list. It’s a means of pre-qualifying your business for future opportunity.

If you want to Find Clarity and enjoy research-based customer insights, Clarity offers in person customer interviews for SMEs in Hackney. We offer a package of 5 half hour interviews per month and promise 5 actionable insights from each interview, providing you with authentic, independent customer feedback and a suite of marketing materials to build your reputation and word of mouth referrals.

The post Supply Connect: Getting Your Name On The List appeared first on Clarity.

Since 2010, Hackney Council had lost 40% of it’s core spending power. They are facing a £36m shortfall just this year. The Mayor, Caroline Woodley, welcomed the Budget and praised the government for being one that is willing to “invest, reform and work with, not against councils.”

Caroline Woodley, Mayor of Hackney. Taken from news.hackney.gov.uk

Source: DLUHC; mhig revenue outturn (grants), ONS CPIH, adjusted to constant Dec (AI used to create this chart) Alt: A line graph plotting a gradual decline in Council funding in real terms over 20 years, dropping £40bn until a small uptick as of the 2025 budget.

What Money Has Been Promised To Fill The Void?

Councils will keep any receipts from Right to Buy sales in order to create new housing and a whopping £1bn will be provided for SEND (Special Educational Needs and Disabilities). The Household Support Fund for vulnerable families has a one year extension.

And Where Will The Money Come From?

A significant increase in employer and investor taxes. The government has effectively transferred much of the cost of social welfare to business owners. This includes increased wages, increased National Insurance contributions, and increased business rates.

In summary, the Chancellor announced changes that will impact your SME … and soon. In fact, it’s time to give serious consideration to your staffing levels, your business property, your pension arrangements and, if you’re an investor, your exit strategy.

Reason for Concern?

There was an overwhelmingly negative response from the business community. Huge concerns were raised that the overall effect will be to put businesses off from investing in their growth and people and, worse, that many businesses would simply not survive.

The Institute of Directors (IoD) did a snap poll of over 500 business leaders. The results? 80% reported feeling negative about the Budget. That’s a 13% increase on last year. The Institute concluded there were ‘worrying implications for the economy’s future growth trajectory’.

A “tough Budget for business to swallow” Shevaun Haviland, BCC

If you own a small coffee shop in Shoreditch or a design agency in Dalston with, say, 5 – 10 staff, things are about to get tight.

The most scathing response I have read was from the London Chambers of Commerce and Industry (LCCI), who include the London Borough of Hackney in their borders. They said that London businesses were “losing faith in the Government’s economic growth strategy … [that the Budget had] not gone far enough to protect London businesses which are the engine room of nationwide growth.” … [and that] “the only certainty they received was higher costs.”

An Alternative View

Is the loss of struggling businesses a necessary step to righting a stale economy? Unproductive businesses will go fallow, leaving space for those with higher margins to expand. Zombie companies, named because they aren’t able to make enough money to invest in any growth, will finally meet their end.

There’s also concern not enough money is being re-channelled to public services. Hackney Councillor Claudia Turbet-Delof implied the needle has not swung far enough. She warned that Hackney Borough will face a “complete exhaustion of reserves’ within 18 months”. The Local Government Association (LGA) agreed and said the Budget failed to provide the increases in council funding that they “desperately need.”

The Big Squeeze: Running A Profitable Business Just Got Harder

Increases to National Insurance

The Employment Allowance, or the threshold your total staff wage bill needs to hit before you have to pay Class 1 NIs for them, has gone up from £5,000 to £10,500. The previous cap on claims of £100K is no more.

At the same time, your liability per employee has dropped from £9,100 to £5,000. The rate of NI Class 1 contributions will also rise to 15% next year. This means paying 1.2% more tax on an additional £4,100 of earnings per employee, regardless of what profits you make. Also, this £5,000 threshold has been frozen until 2031, which means that as wages rise each year, the effective threshold will get lower and lower. Experts call it ‘fiscal drag’.

Takeaway #1: Even if you have only 4 full-time employees, it’s likely you will be paying more NI than you were before. SMEs, especially in the hospitality and service sectors, are going to need to think carefully before their next hire. Ensure your payroll software is updated to claim this automatically from Month 1 of the new tax year.

Consider the following example:

The Sweet Spot: An imaginary independent bakery in Hackney.

• Staff: 1 Manager, 1 Head Baker, 3 Floor Staff (mix of full/part-time).

The business faces a drastic increase in underlying NI costs due to the rate rise (13.8% → 15%) and threshold drop (£9.1k → £5k).

Despite the increases, this business actually pays £1,410 LESS in National Insurance than before because the allowance increase (£5,500 extra relief) outweighs their NI cost increase (£4,090 extra cost).

Increases to National Minimum Wage

For SMEs, the costs of training for any apprentices under 25 will be fully funded and the 5% employer contribution removed. This will help with developing younger staff in-house while managing the rising cost of employment.

At the same time, minimum wage rates will rise from April 2026:

• Over 21s (National Living Wage): Rises to £12.71 per hour.
• 18 to 20-year-olds: Rises to £10.85 per hour.
• Under 18s and Apprentices: Rises to £8.00 per hour.

Takeaway #2: If you employ anyone at NMW rates, your wage bill Is about to increase across the board and not by a small margin.

Increases to Business Rates

Business rates are essentially the “council tax” for commercial properties, paid by businesses on the shops, offices, and warehouses they use.

From April 2026, The Chancellor announced a 40% relief for retail, hospitality, and leisure (RHL) properties. However, previously, the relief was 75%. This is an effective increase. Of course, businesses in other sectors or with larger, more expensive properties valued over £500,00 will be paying higher rates to pay off the shortfall.

Takeaway #3: The is a relief cut, not an additional benefit. The government wants high street businesses to pay less than their larger out of town counterparts. The £500, 000 business property threshold will disproportionately effect parts of the country where property is valued more highly. This is all in addition to Hackney’s increasingly higher rents as higher wage earners spread out from Central London.

Karim Fatehi, CEO, LCCI. Taken from londonchamber.co.uk Quote from Autumn 2024 Budget | News and Insights – LCCI

“We are deeply concerned… the combined package of increased employer National Insurance Contributions, cuts to business rates relief, and minimum wage increases will create a challenging environment… and curtail their ability to invest or hire new people”.

Summary of Effects on SMEs

20 years of change in National Minimum Wages and Employer NI Thresholds

Chart created manually (NMW based on a 16.5 hr working week).

The Big Squeeze: Earning From Your Business Just Got Harder

The Squeeze on Dividends

Many small business owners pay themselves a combination of a small salary and dividends (a share of the company’s profits). Owners who pay themselves a low wage but a high dividend will find, from April next year, that this approach will pay less than before.

From April 2026, the tax rates on dividend income will rise by 2% (from 8.75% to 10.75%; higher rate from 33.75% to 35.75%).

Jason Hollands, managing director at Evelyn Partners: “These hikes seem to be aimed mainly at extracting more cash from the UK’s small business owners, who don’t have the option of owning their company shares in a tax efficient individual savings account.”

Annual Investment Allowances (AIA)

The AIA allows you to deduct the full value of qualifying items from your profits before tax. Instead of steady depreciation being built into your accounts to cover the value, you get 100% tax relief in the year you buy it, limited to a cap of £1M. This change begins with immediate effect which means, if you are profitable this year, make sure your equipment purchases are invoiced and delivered (and clearly dated) before your company’s financial year-end.

The Sweet Spot, our imaginary Hackney bakery.

The owners could invest in equipment such as:

• Kitchen Equipment: Ovens, fridges, coffee machines, dishwashers.
• Fittings: Air conditioning, heating systems, extraction fans, bathroom fittings (these are “Integral Features”). Consider fixtures like new bars or shelving.
• Tech: EPOS systems, computers, sound systems.

Let’s say the bakery makes a gross profit of £60,000. They decide to invest in a new deck oven and air conditioning before their year-end.

• Purchase: New Deck Oven (£12,000) + AC Installation (£8,000) = £20,000 Total.

By using the AIA, the business saves roughly £3,800 – £5,000 in Corporation Tax immediately.

The Squeeze on CGT

First, note that if this is your first year paying CGT, there is a 40% relief available from January 2026 (with the other 60% eligible for writing down allowances from Year 2 onwards).

For all other businesses, the main rates have increased from 10% and 20%, with the higher rate rising from 18% to 24%. While the main rate is capped at 25%, the “write down allowance” main rate was reduced, meaning businesses will now receive less tax relief on investments in equipment.

The Squeeze on Asset Disposal

Business Asset Disposal Relief rate will increase from 10% to 14% (April 2026) and then to 18% (April 2027). This means that selling after April 2026 could cost substantially more. Although the standard CGT rate for higher-rate taxpayers is 24%, the difference is shrinking between the two.

Hackney CADS: An imaginary design agency in Hackney.

Hackney CADS plans an exit with a £2.5 million gain in value.

By 2027, the margin between taking advantage of BADR and paying main rate CGT will only be £150K, shrinking quickly from the current £350K.

Derry Crowley, CEO of Xeinadin. Taken from the Xeinadin.ie website. Quote from RedLeafAccountancy

“The reduction in the writing down allowance limits businesses looking to invest in equipment in order to remain competitive. Removing £1.5bn in relief at a time when firms are already managing tight margins could make long-term investment harder, not easier.”

Summary of Effects

Takeaway #4: The government is encouraging investors to stay put and build what they have, rather than flip and move on. Exiting is more expensive but rewards investing cash in hard assets. Owners, contractors that are winding down companies, and those planning management buyouts or family transfers will all be affected. Planned exits will be significantly if executed before April 6th next year.

In summary, the 2025 UK Autumn Budget recalibrates the costs of public services and shifts those costs to businesses through increased employer National Insurance, higher minimum wages, and reduced business rates relief (for retail and hospitality). SME will simultaneously be taxed more for business exits.

The Big Squeeze is on.

The post Autumn Budget 2025: SMEs Squeezed – What It Means For You appeared first on Clarity.

Did you know that Hackney is a national leader in using this kind of funding to support local businesses? Between 2022 and 2023, half a million pounds was shared among 453 local businesses and there’s more to come …

When your SME is growing and you’re considering raising funds, the most obvious route is to get a bank loan or seek out some kind of Business Angel or Venture Capitalist support. Part 1 of this blog explained what raising debt and equity financing involves, including the challenges and risks involved and showcasing a few success stories. In Part 2, we’ll be looking at grants and competitions available to SMEs in the UK with a focus on the London Borough of Hackney.

What is Grant Funding?

Grants? If you’re thinking student grants, or energy efficiency grants, you’re on just the right track. Grants generally come from public money i.e. they’re taken from a pot of money that is generated mostly through taxation (including business rates). This money is being awarded or redistributed to individuals or organisations deemed worthy to receive it.

This is key to understanding why grants get awarded. The goal is to use public money for the public – to take tax money, lump it together, give it to the right people, all for the public good. Social enterprises can usually benefit because they are linked so closely to providing services for the public. More information here.

Key Takeaway: The more aligned you are to central or local government initiatives, the more likely you are to be eligible for a grant.

A lot of these grants go back into the government to support services we all need e.g. schools and policing but a portion is provided to SMEs and industry to accelerate policy initiatives or development in selected areas of the country.

How Much Could My SME Get?

This is the big question. Grants can range from £500 to £2 million (Innovate UK). There’s a table below highlighting the opportunities available but, before we get to that, not all grants are available to all companies and what you could get depends on a few factors:

• Government policy. As explained above, money raised through taxes is re-distributed by the UK government and that means there are priorities. For example, the UK has committed to a promise of Net Zero by 2050. How you define that may vary but grants are increasingly linked to carbon reduction or energy saving initiatives. Another example is AI. It’s incredibly fast adoption requires new infrastructure while it’s promise of efficiencies requires new training and operations. It’s no surprise to see that grants are often aligned with those needs.

• Sector. STEM industries are generally more represented when it comes to grant funding. Think of how a long-term sustainable economy works and you can see why being a manufacturer, technology or science outfit is a bigger opportunity for the government to boost it’s investment.

• Business Purpose. If your organisation’s mission is focussed on helping the local community, such as a charity, foundation or social enterprise, it’s likely there’s grant money available to support you in some way or another. Again, beyond having a contract, it fits with what your local government is trying to achieve and supplements their own services.

• Geography. Although there are national grant opportunities, many are based in areas that central or local government are trying to develop. If you’re a Hackney SME, this is good news as Hackney is one of the more prominent local authorities for incentivizing and supporting local business.

How Do I Apply?

If you want to know what is available and how to apply, search the above funds by name. For a broader view, go to UKRI, the Entrepreneur Handbook, Grantfinder or your Local Growth Hub.

For Hackney, if you’re a social enterprise, there’s a one stop shop at Hackney CVS.

“I think that’s the thing about fundraising, people internalise rejection all the time. But it’s not that they’re not good enough; it’s that they’re trying to write themselves into a system that wasn’t designed for them.”- Jamila Daley-Jeffers, Grant Applications Expert at Tabitha’s People, Hackney

There are a few things you should be aware of before you plough ahead and start filling in applications:

• Competition. As an example, previous to a pause at the start of this year, Innovate UK grants were extremely competitive. Reports say that applicants only achieved a 2% success rate (
• Time-consuming application process. Writing a grant application can take up to eight weeks but specialist application writing services can reduce this to 2-3 weeks. This includes a comprehensive business plan that details the project, market opportunity, team, and financial projections.

• Matched Funding. Some grants will require that you match a percentage of the award. For Innovate UK Smart Grants, this ranged between 30 – 75% of the project costs.
• Useage Requirements. How you use the money you are awarded may be very strict. It can’t be used for marketing, sales or pre-existing business debts.
• Reporting. The more money you’re awarded, the more monitoring of how it is spent you’ll be required to do. This can include regular progress reports, financial reports, and often an Independent Accountant’s Report (IAR).
• Tax Requirements. Grants should be reported as income. They may still be liable to Corporation Tax. Employer’s NI and VAT still apply. If you qualify, you can still claim Research and Development (R&D) Tax Credits, even if the project is unsuccessful. Check the small print on the grant application and award.

Key Takeaway: Grant awarding bodies want you to grow but they are answerable. Expect strict requirements on how you use and monitor the money

What Alternatives Might My SME Get Instead of Money?

Accelerator (or Escalator) Programmes provide you with mentorship, collaborative expertise, and/or training to help you develop a specific project. These require you to be available for a period of weeks to benefit from the expertise you are being offered.

For example, the Mass Challenge UK Accelerator Programme. This is based in East London and, for 2025, primarily looked to identify the best innovators in AI and Autonomy. Partners included BAE Systems, University of East London and Queen Mary University. No cash grant is given but it offers several months of mentoring along with a network of expert advice and knowledge. Applications launch in January with competition awards being announced in October. Partnerships can continue beyond the programme.

As an example of a combination of the two, Hackney Impact Phase 2 (2025/26) offers a cash grant alongside a programme that provides a wide range of support, including 1:1 coaching, business courses, free on-site energy audits, and access to net-zero grants for retrofitting business premises.

Case Study: Calla Lily

Calla Lily began working with Innovate UK Business Growth in May 2021. After being awarded an initial £350,000 Innovate UK grant, expert assistance was given via an Innovation and Growth Specialist. The company subsequently received a £700,000 Innovate UK Biomedical Catalyst grant to work in partnership with Queen Mary University of London and University College London (UCL) School of Pharmacy.

“Innovate UK Business Growth has helped us progress from an urgent need to a commercially viable and socially meaningful solution. We’re excited to be moving forward with clinical trials and continuing to grow a business that puts women first.” Thang Vo-Ta, CEO and Co-Founder of Calla Lily Clinical Care

Where Grant Applications Often Fail

• Lack of ‘Game-Changing’ Innovation: Failing to convey a significant technological or social leap.
• Unclear Market Need: Not providing sufficient evidence of customer demand or a clear route to market.
• Weak Impact and Benefits: Vaguely defined economic, social, or environmental benefits.
• The Wrong Team: Not demonstrating that the team has the requisite technical and management expertise to deliver the project.
• Muddled Budgeting: A budget that is unclear, unjustified, or does not represent good value for public money.

What Can I Win At Competitions?

Have you ever entered the reception of a company and noticed the cabinet with the glass trophies? Even the ones that say ‘Finalist’ are an endorsement and builds trust. What other benefits come with taking part?

• Marketing: Involvement in an award ceremony leads to publicity that would otherwise cost thousands of pounds. Your business and potentially a photo opp can appear in trade press, the award’s website and you receive content you can use on your own website too.
• Recruitment: An award is a great tool for recruitment and helps to attract better talent.
• Networking: The ceremony is a room full of your most ambitious potential partners for future business.
• Business Support. This could include specialized workshops, training, mentoring and training for pitching.

The costs of entering, applying and attending interviews and presentations are not small. These can include:

• Application Fees: This can range from being free to several hundred pounds.
• Awards Dinner: This is often the most significant cost. Tickets cost anywhere from £200 to £500+ per person. A table for your team of 10 can cost a few thousand pounds.
• Time-Consuming Application Process: The application requires detailed strategic answers, compiling financial data, gathering testimonials, and careful proofreading.

Key Takeaway: Application fatigue can prevent you from tailoring your answers to subtly different questions

Competitions live as of November 2025:

Case Study: Too Good To Go

Again, an example is The Mayor of London’s Entrepreneur Competition for London-based students with the goal of innovating ways to make the city cleaner and greener. The prize is £20,000 in funding alongside expert mentoring.

Chris and Jamie from Queen Mary, University of London were finalists in 2017 with their idea, Too Good To Go. This is an app and online platform helping eliminate edible food waste within the hospitality sector. The app allows restaurants, cafes and bakeries to sell their surplus food at the end of breakfast, lunch and dinner service for between 50-90% off regular menu prices.

Too good to go now operate in 6 different countries with 4,500 partner stores. They have saved over 1.6 million meals and have avoided over 3200 tonnes of CO2.

Where Competition Applications Fail:

• Generic Applications: Applications that lack concrete evidence will not make the shortlist.
• Application Fatigue: As with job applications, copying and pasting into multiple applications prevents you tailoring each answer when questions seem subtly different.

The post Win Money, Not Debt: Overlooked Sources of Funding For SMEs Part 2 appeared first on Clarity.

Amid these huge numbers, many small and growing businesses are chasing that dream: securing that game-changing investment to fuel growth and turn a vision into reality.

Sometimes companies end up chasing growth for the sake of growth rather than thinking about profit.

I attended the BPIC’s Kickstart programme a few weeks ago and our group of new business owners were shown a slide with a list of all the options available. There were a few things on there I’d never considered and, since then, I’ve been wondering how it all works. So, let’s find out what the funding landscape actually looks like.

What is Debt Financing?

Perhaps the most obvious place most of us think of for securing additional money is our bank – whether it be a loan or an overdraft facility. However, the UK Government, via the British Business Bank, also supplies Start Up Loans to small businesses. Funding Circle, a platform for peer to peer lending also offer loans to businesses. Finally, you can get large amounts of credit in the form of a credit card from Capital on Tap.

A couple more debt financing options are Asset Finance. This form of borrowingaccepts your business’ physical or intangible assets (think IP or patents) as collateral to obtain the finance. Asset finance has the highest recorded approval rate among debt types, at 96%.

Last but not least is Invoice Finance, where you sell your unpaid invoices off to a third party to collect and, in return, they advance up to 90% of the uncollected payment, then go and collect the whole payment themselves.

Who is Debt Financing suitable for?

Debt financing is generally best suited for businesses that have predictable revenue streams and tangible assets, such as manufacturing, retail, or established service businesses. It is typically less suitable for companies in the early stages, such as pre-revenue startups or R&D-intensive firms. The average success rate for SME lending sits at 50%.

Case Study: Amity Brew

Amity Brew Co is a local craft brewery, offering a range of draught and canned beers. They provide tours of the brewery, an outside terrace, inside bar and weekly events for the community. They also have their own merch for sale. The three directors took out their loans in April 2020, at £25,000 each. The Start Up Loans funding aided the business in opening its first bar and brewery in Farsley and contributed to purchasing a canning line and recruiting new team members.

As of May 2025, Amity Brew Co is expanding its operations, recently securing a £150,000 investment from Finance Yorkshire for a new production facility in Bradford.

Debt Finance Examples (October 2025)

What is Equity Financing?

To most of us, our greatest exposure to this type of funding is Dragon’s Den. A business seeking investment offer a percentage of ownership in their business for a cash injection. I’m sure we’ve all found ourselves watching and wondering how the seemingly naive business owner came up with that million pound valuation.

The Dragons, and Lord Sugar from the Apprentice, are Angel Investors, bringing their own personal fortunes (in piles of £50 notes) to spend on whomever they see the potential in. Along with the percentage of the business comes the influence they can have on the decisions and investments the business itself goes on to make. The ideal scenario is that 5 – 10 years down the line, the business can be sold on at a much higher value and their percentage of that value is paid back to them.

Venture Capitalists tend to invest larger sums (£250,000 or more) of other people’s money. They will get more involved in the running of the business they invest in, sometimes taking a seat on the board and advising on the business’ core strategy.

Not to be forgotten …

Also under this header comes friends and family, the Bank of Mum and Dad. Crowdfunding (Crowdcube, Seedrs) is another equity-based method of raising funds.

There are UK Government initiatives to incentivise investors. SEIS (Seed Enterprise Investment Scheme) is for start ups trading less than 3 years and EIS is for SMEs who have been trading less than 7 years. Investors receive income tax relief as a credit. They are also not taxed on Capital Gains Tax (as long as the business continues to qualify for 3 years) and can claim loss relief. Note that the criteria for receiving the tax-related benefits are multiple and strict.

Who is Equity Finance suitable for?

Equity funding is typically more suitable when a business is going to market or looking to grow, especially once a developed, proven product and clear customer base are established. A successful crowdfunding campaign can also serve as effective marketing and a proof of the popularity of a business concept. Certain companies, such as property holding businesses, banks, and businesses primarily exploiting third-party intellectual property, would be unlikely to qualify for SEIS/EIS.

Case Study: PerfectTed

PerfectTed, clean, matcha-based alternative energy drinks, received a £50,000 investment from Dragons Steven Bartlett and Peter Jones for a 5% stake. The investors helped the business to go global. Within two years, the company reached a £140 million valuation.

Insight #1

Limited companies are increasingly being asked to give personal guarantees.

What does this mean?

Putting your personal assets, like your house, on the line before receiving any loans. This includes banks and the government’s Start Up Loans scheme. In other words, you are no longer protected by your limited company status. The money is given to you and not to your business.

Insight #2

Consider the opportunity cost of the time spent on securing a Venture Capitalist.

What are the odds?

For many grants, the strict criteria for entry makes finding something that doesn’t require you to adjust your business strategy a little, if not a lot, is a challenge. If you do apply, the application process can involve interviews, targets (with the potential risk of clawback if missed), monitoring and reporting requirements. Which is why Universities have bid writing experts working full time to find and complete their applications.

Venture Capitalist funding has been known to require meeting and pitching to 45 VCs over 15 weeks before securing investment. The average success rate for venture capital applications remains extremely low at 1-2%.

The question has been asked whether the time spent on the cycle of applications, followed by the bureaucracy of monitoring, might just end up costing more than the value of the award.

Insight #3

Weigh the loss of control, especially if multiple rounds of funding are likely.

What is the impact?

An Angel Investor using their own money, or Venture Capitalist investing collected funds, will require an equity stake. We might have heard the reasoning that the business will have a ‘smaller slice of a bigger pie’. Another aspect of equity dilution that needs to be weighed up is the inevitable loss of control. Naturally, investors want a rapid return (often looking to achieve 10x their initial stake). The larger the equity, the more influence they will have on the board and your strategy, and to what end? Faster growth and a faster exit.

Insight #4

Take special care when setting up EIS or SEIS funding.

Certain types of companies, such as property holding businesses, banks, and businesses primarily exploiting third-party intellectual property, generally do not qualify for these schemes. Acquiring ‘advance assurance’ from HMRC to ensure no one loses out is advised.

SEIS and EIS requirements

In Part 2, we’ll talk about grants and competitions, as well as the unique opportunities available to social enterprises and charity organisations.

The post Beyond the Bank: Overlooked Sources of Finance for SMEs Part 1 appeared first on Clarity.

I’m a small business owner who wants to leverage AI myself, so what’s the deal? Are we all going to be replaced … or enhanced? Let’s find out.

How Do AIs Search For Answers?

If you’ve been keeping up with the tech news, you might want to skip this paragraph, but a lot of business owners are still at the starting line trying to understand what AI can do. Artificial intelligence is a system that does things in a human-like way. We’ve all used Google search and learned to change full sentences into keywords to get the information we were looking for.

Then Chat-GPT came along and we could just start to type in (or say) a question and, a few seconds later, the answer wasn’t a list of new Internetty links to choose from, but a paragraph of human-sounding text explaining what the answer was. Jaw successfully dropped.

In only a couple of years, we’ve learned that a lot of those answers have been plucked out with some, but not much discernment, from the largest library in the world, the World Wide Web. How do they sound so human? It’s all due to LLMs (that’s Large Language Models) – a huge memory bank of millions of real sentences, all broken down into pieces and their probabilities of occurrence all notched into percentages.

Now, when you ask, ‘What is the capital of France?’ – just imagine all the books, films, blogs, poems etc. etc. which have referenced the answer … Paris. So the words ‘France’, ‘Paris’ and ‘capital’ have a super-strong percentage chance of occuring together. The LLM looks at that very high percentage and tells you, very confidently, and with increasingly more life-like phrasing, what the result of it’s comparisons is. Adoption of this amazing new technology has been rapid and, perhaps because it sounds so human, many people have started asking AI models for advice – 53% of UK small business owners are using Chat-GPT and its friends to help them guide business decisions. [1]

The Rise of Agentic AI

We are now moving from AI-search to AI-Agents, who perform a series of instructions for you based on the training you’ve given them. In some cases, these AI Agents can even make decisions on your behalf. Albania has recently appointed an AI government minister to handle public government contracts and has executive decision-making powers. [2]. On the horizon? AI Agents built into your Internet browser that can view your history and all your personal files, decide on your preferences, and buy or organise things it knows you like. And beyond that? The Agentic Web – Agents working together without any human involvement, comparing the data they have collected and coming to mutually favourable decisions [3].

So, should a small-medium size business be investing in this future? I mean, beyond the casual use of Chat-GPT, Co-Pilot or (for the dabblers) Claude. Is AI the game changer?

One Statistic That Speaks Volumes

Are you ready for the statistic MIT came up with in July this year to headline their study of Generative AI adoption’s Executive Summary [1]?

Despite $30–40 billion in enterprise investment into GenAI, this report uncovers a surprising result in that 95% of organizations are getting zero return.

This shocked me. That is a lot of money which, at least in the opinion of the researchers, had not led to the expected revenues that AI was meant to unlock.

So, some caution is in order here. If we think about it … not everyone needs a power drill. Now, if you need a drill, then you should absolutely invest in a power drill. AI is a powerful tool for repetitive, easily-supervised, non-risk business tasks. It is very much taking away junior roles in software-driven business sectors and, unemployment and related mental illness consequences aside, it makes sense that the kind of jobs a junior staffer would be given are the kind of jobs AI feeds off.

AI adoption and the J-Curve

Initial adoption of AI business solutions leads to a shift in the way a business works and consequent re-training, legacy program integration and all the related costs of building new efficiencies in. This means that businesses adopting AI in a big way see an initial drop in profits. The numbers show businesses taking 18 months or more to start seeing any financial benefits (between 2017 and 2021). [4] However, by the end of the 4 year period, early adopters had begun to outperform their non-adopting competition.

“AI isn’t plug-and-play,” saysKristina McElheran, one of the authors of a paper on the rise of AI in the US, “It requires systemic change, and that process introduces friction, particularly for established firms.” 

Sources: AI generated. Sector comparisons are based on 1) how widely different industries are using AI and 2) how advanced they are digitally, from official U.S. business surveys (BTOS and ABS) and insights from multiple other studies (census.gov, federalreserve.gov, apps.bea.gov).

Larger and/or more digitally mature businesses were better placed to get the advantage earlier. Complementary business functions needed parallel investment, such as data infrastructure, training and designs of workflows to accommodate the change. Without them, bottlenecks can appear or AI fails to deliver at the expected rates. Older organisations with legacy systems and very established routines also took longer to see the benefits. So, the more tech-adjusted you already are, the more nimble you are, the more likely AI can boost your company’s activity.

“AI isn’t just plug and play”

One corporate lawyer from a medium-sized firm noted that a $20/month ChatGPT subscription consistently produced better outputs than her firm’s $50,000 specialised tool. She noted:

“Our purchased AI tool provided rigid summaries with limited customization options. With ChatGPT, I can guide the conversation and iterate until I get exactly what I need. The fundamental quality difference is noticeable, ChatGPT consistently produces better outputs, even though our vendor claims to use the same underlying technology.” [3]

Security

If you are planning to invest in building your own AI solution, the model will need constant updates and maintenance, and the responsibility for security is all on your shoulders. The less human supervision a system has, especially if Agentic AI is used, the integral design of an LLM means that, without intervention, it sees your initial instructions and any other data it comes across with equal value.

Here’s part of a discussion about how LLMs work. Note the italics added by me:

“The difference is that LLMs are fundamentally insecure in this way as part of their basic design … this programming language deliberately executes values stored in the String type sometimes, depending on what’s inside it. And we don’t really understand how it makes that choice, but we do know that String values that ask the language to execute them are more likely to be executed. And this is fundamental to the language, as the only way to make any code execute is to put it into a String and hope the language chooses to run it.” [5]

In this grave new world, bad actors could plant secret commands (string type = text instructions) inside otherwise inoffensive website content. Your AI Agent crawls that data and asks you if you want to take a benign action e.g. ‘Summarise findings’, and then actions it.

What Can AI Do For SMEs?

Consider what tasks your business would like to enhance and the risk-reward profile:

• Could an off-the-shelf tool handle this for you? (see below for examples)
• Are you looking to combine multiple systems into more automated workflows?
• Is it something currently controlled by a human but with large financial or compliance risks attached?

If the answer is yes, seek the advice of an AI architect or consultant who can check how viable an AI system is. Or, join an Accelerator programme for SMEs, where expertise is more readily available (see below for examples).

Off-the-shelf solutions

UK AI Innovation Opportunities

Keep an Eye on the Dials

It goes without saying, but monitor your ROI and KPIs to ensure you know what benefits you’re getting. Appoint a champion who will explain the reasons and benefits to staff, of whom many are probably skeptical of AI more generally. On the opposite side of the aisle, some may be overconfident in their trust of automated systems. A pilot project involving a few voices from across the business might help with persuasion. Consider data risks especially and set out what the response should be in case data is compromised. Then, set the example and try to understand the technology yourself so that you can set a leading example in making use of it, and be among the first to notice any issues.

[1] What Does Worldpay Survey Say About UK SMEs’ Attitude to AI? | Business Chief North America

[2] Albania appoints world’s first AI-made minister – POLITICO

[3] State_of_AI_in_Business_2025_Report MIT NANDA Aditya Challapally Chris Pease Ramesh Raskar Pradyumna Chari July 2025

[4] The Rise of Industrial AI in America: Microfoundations of the Productivity J-Curve(s)

[5] Comet AI browser can get prompt injected from any site, drain your bank account | Hacker News

The post Before You Invest in AI: What Every SME Owner Should Know appeared first on Clarity.

Reviewing your record-keeping system

The requirement for no manual re-entry and digital links effectively means that some software purchase is required. It’s estimated that even the cheapest solution will cost around £150 per year with total costs to make the changeover being around £330.

HMRC have an approved list of software suppliers they will accept digital links with. Any software you purchase or subscribe to must explicitly say that it is MTD compatible (including VAT if applicable) and, if you work with an accountant, have the capacity to link with them too.

Also, consider that once set up it may be increasingly inconvenient to switch to another provider in the future and set up your digital links again and migrate all your financial data (e.g. uploaded receipt images). There are also some concerns that reliance on third party, potentially cloud-based solutions, may have data protection risks. A decision needs to be made, though, and it may be advisable to engage an accountant or financial professional.

There are two ways you can set up your accounts. If you’re using spreadsheets, you can keep doing that, but you’ll need some bridging software that reads the spreadsheet and transfers the information to HMRC without any more manual entry. Or, you can use a full accounting solution, generally provided by a software house. This one stop solution means you enter your accounting information and the same software will submit the information directly to HMRC.

Which software should I buy?

A couple of notes. 1) Costs are approximate and might have changed. Always check with the official provider for current pricing and terms. 2) FreeAgent is free of charge to customers of certain banks as part of their business account offer (NatWest, Royal Bank of Scotland, Ulster Bank, or Mettle)

Penalties for Late Submission

Apart from the costs of implementing a way to report for ITSA, you should also consider the penalties of poor compliance. Rather than set fines, HMRC are implementing a points-based penalty system.

One penalty point is incurred per late submission.

If these penalty points build up to four points, you will receive a £200 penalty.

If compliance improves, your points expire after 24 months.

HMRC can cancel or reset penalty points for certain circumstances e.g. insolvency.

£200 may not seem much but, if the penalty points remain high, the penalties will continue to be charged. If you reach the need for a penalty, you’ll have to avoid the next submission being delayed 3 months later. This might lead to a cycle of financial difficulty.

Businesses can no longer afford to leave their tax reporting till the end of the year to sort it out.

The Benefits of MTD

This obligation to report more regularly can be seen as an opportunity. Setting up a system to categorise all income (e.g. self-employment income, property income, dividend income, savings interest) and expenses as they occur will give you a clearer idea of your cash flow, current debtors and invoices that require chasing.

Developing a habit of updating your records once a week or once a fortnight means you will be clearer on where your money is going and will help you know how healthy your business actually is. You may even get better insights into which times in a quarter or year’s cycle are better for investing in your business or marketing campaigns. Better, clearer accounts gives you a better chance of successfully applying for funding or credit.

As you consider investing in software, consider automating other parts of what you do e.g. reading PDF bank statements or supplier invoices.

What to do now

Step 1: Register at Sign up for Making Tax Digital for Income Tax – GOV.UK

To successfully sign up for MTD ITSA, you must already have the following:

• A Government Gateway ID and password
• Your business’s VAT number (if applicable)
• A business email address
• Your National Insurance number
• Your company registration number
• Your Unique Taxpayer Reference (UTR)

Step 2: Connect your chosen MTD-compatible software to your HMRC online services account.

Step 3: HMRC will confirm your registration by email.

Recommendations for different sizes of business

Recommendations for specific sectors

The post My MTD Survival Guide: The Cost of Compliance (Part 2) appeared first on Clarity.

MTD is, if you haven’t heard by now, Making Tax Digital, an initiative from HMRC to ensure almost live tax reporting and, eventually, tax payment. The project has been gradually implemented over the last 6 years and since April this year all businesses that charge VAT should already be joined with HMRC at the computer-chip. (Employers have been using RTI (Real Time Information) to report PAYE since 2013 but that is a whole different system.)

The next stage, over the next 3 years, is to have small businesses reporting their income tax and property income every 3 months. You read that right. Every 3 months. No more sweaty Januarys emptying glove boxes, back pockets and receipt tins. Instead, small businesses will soon be in a constant reporting cycle of 5 tax returns every year (four quarterly updates and an annual final declaration).

So, get yourself a napkin and work out your expected turnover for your current financial year i.e. your gross income, before accounting for any expenses or tax reliefs. This includes any property income (including furnished holiday lets) you may receive as a landlord. It does not include any PAYE income you receive from other employment.

Then check the timeline for adoption…

If the number you’re staring it is over £50,000, you will need to adopt everything described below starting from April next year (7 months away). If you are near the threshold and there’s a chance you might tip over £50,000 during the 2024-5 tax year, you’ll also need to get prepared for April next year.

However, even if you can’t imagine your turnover hitting £20,000 soon, the advice from the business community is to start getting ready now. Don’t underestimate how much your behaviour will need to change to make this a seamless transition. Even if you’ve been running a small business for years, waiting until you have to change may well end up being more expensive and a lot more inconvenient.

One addition to this – note that there have already been delays and there is a chance there will be further postponements to the above published timeline.

Let’s be clear …

This is not just a tax change. How much tax you pay is a completely separate question. This is a wholesale change in how you report and how often you will need to report.

Businesses can no longer afford to leave their tax reporting till the end of the year to sort everything out

If you aren’t paying VAT already, you will need to change the set up of your current software or, you’ve guessed it, buy completely new software. There are specific rules to prevent any manual re-entry after you first entered your initial accounting figures. The idea here is that accidental copying errors will be totally prevented. The concern is us small business owners don’t set things up properly in the first place.

The requirements for digital record-keeping and having software that will talk to HMRC applies equally to all businesses, despite their employee headcount or when they start actually reporting. This means the costs for this specific Income Tax and Self Employed reporting are effectively the same. However, there are also some benefits which smaller businesses are likely to get comparatively more of. More about that soon.

What does ITSA MTD reporting involve?

Keeping clearer digital records. Especially if you have mixed income streams, all income and expenses must be broken down by type of income. You may keep this information on a spreadsheet but you must use bridging software to send the data to HMRC without any manual re-entry of the figures.

Quarterly updates. Every quarter of the financial year (you can request to use your own financial year), by the 7^th of the first month of the new quarter, the previous quarter must be reported.

Verify that the digital link has worked and the figures have been sent accurately:

End of year final declaration. The final declaration will be pre-populated with the income and expenses data already submitted through the quarterly updates i.e. all sole trader and landlord data.

This end of year declaration replaces the Self Assessment return.

Note: Gross sole trading and rental income may only be a part of the total taxable income reported at the end of the financial year. It may be easy to overlook some income sources for this end of year return and so, although not included with the quarterly updates, complete records must be kept throughout the year. You are expected to keep digital records of all income and expenses. This does not mean a photograph or PDF but at the very least the amount, category, and date of each. Digital records can either be held in accounting software or on spreadsheets. Keeping paper receipts for bookkeeping may still be best practice but they are not required by MTD.

For VAT, records must include the time of supply (tax point), debit/credit notes, imports/exports, VAT-exempt items, and expenses that do not incur VAT.

For ITSA, records must detail self-employment income, property income, dividend income, savings interest, and allowable business costs, supported by valid evidence such as sales invoices, business bank statements, tenancy agreements, and dividend vouchers.

The payment deadlines for income tax haven’t changed from the current 31 January and 31 July each year.

What if I make a mistake?

Between quarterly updates, it might come to light that an accounting error has been made. You can correct this on the next quarterly update. But note that the final declaration pre-populates from your Q4 update so accuracy on the final update of the year is crucial.

If you are late with your submission, HMRC will award you penalty points. All penalty points expire after 24 months of sound compliance unless HMRC grant an exception.

So, what do I have to do?

Check if you are exempt.

Exemptions are automatically applied if you are a:

Exemptions can be claimed and must be approved by HMRC if you are digitally excluded due to:

If you start trading as a sole trader or acting as a landlord after 6 April 2026, you can submit a Self Assessment tax return first before you transition to MTD, or you can choose to register straight away.

If you’re exempt, it may be worth your while to know a bit more about it in case your exemption state changes.

If you’re not exempt, or you’re not sure, read Part 2 where I explain the costs of compliance, software choices,

The post My MTD Survival Guide: What Is Changing (Part 1) appeared first on Clarity.