Realising the Potential: micro businesses' experiences of communications services

The Communications Consumer Panel has called for greater support for micro businesses from government, industry and communications providers to help them maximise the opportunities presented by communications services.

There are an estimated 4.9 million private sector businesses in the UK and 95% of them can be classified as a micro business^{^[1]}. They account for 32% of UK private sector employment and 18% of turnover[2].

The Panel commissioned Jigsaw to carry out independent, qualitative research with 115 micro businesses from across the UK (PDF 2.14MB, opens in a new window). The core areas the Panel wished the research to answer/address were:

To understand which communications technologies and services micro-businesses use and their importance to the business.
What are their experiences of the communications sectors and services?
What are the barriers and challenges, and what are the opportunities?
What, if anything, should or could be done to improve communications experiences to contribute to greater growth?

The research highlights that communications services play a critical role in the success of micro businesses. However, they face a wide range of challenges in using and fully exploiting the opportunities offered by these services and technology for the benefit of business.

The Panel’s report, ‘Realising the potential: micro businesses’ experiences of communications services’ (PDF 645KB, opens in a new window), highlights that, for micro businesses to gain greater benefit from their communications services, action needs to be taken in three key areas:

Government, in association with the regulator (Ofcom), industry and communications providers, should focus on supplying improved speeds and coverage for both fast broadband and mobile voice and data.
Communications providers should consider offering tailored communications service packages for micro businesses, facilitating access to robust services and business grade support levels.
Government, Ofcom, local authorities, local enterprise partnerships, chambers of commerce, trade associations and communications providers should review the information and advice they offer about the benefits of investing in communications, tailored to the needs and time restraints of micro businesses.

The Panel has held a series of follow up seminars across the UK to discuss the research findings and its recommendations with key stakeholders. You can read Jo Connell's presentation here (PDF 1.07MB, opens in a new window).

Panel Chair, Jo Connell, said; “Greater adoption of communications services has the potential to enable micro businesses to ‘punch above their weight’, thus stimulating growth. The challenge is to enable them to tap into this potential. This research highlights three key areas where government, communications providers and those offering information and advice could help support micro businesses.”

The Communications Consumer Panel’s recommendations include:

Improved Speeds and Coverage

‘We have a website, use email a lot and make calls on our mobiles but you are hampered by the fact the broadband speeds are diabolical here and the mobile is very patchy.’ Rural equestrian centre, Wales

‘So I need to be somewhere that I have got phone signal on my phone and it is a kind of worry that if I have not got a signal a panic sets in because I know if there is a problem there is no one there going to deal with it.’

IT support company, urban Northern Ireland

The Panel encourages:

Government and Ofcom to investigate the effectiveness of methods of increasing mobile coverage as a matter of urgency – including the possibility of national roaming. Improved coverage must also address road and rail coverage.
Government to explore, as part of the Digital Communications Infrastructure Strategy, a revised minimum requirement for standard broadband connection which would enable micro businesses to support better their online requirements.
Government to raise awareness of, and stimulate demand for, its small business initiatives, including the rollout of superfast broadband e.g. ensuring micro businesses are aware of the possibility of aggregating vouchers and are enabled to use growth vouchers to good effect.

Tailored Services:

“There is not a problem with them (phones) if you are just working within the UK, that is absolutely fine, that is very straight forward but as soon as my business partner goes to Italy then the tariffs immediately change, it is far more expensive. It is very complicated as to what we are allowed to do and not allowed to do, and if you make a mistake and start downloading data you get charged five quid a megabyte and things like that. It is quite, quite unpleasant when you have missed it and the bill comes in and it is for £400-500.”

IT support company, urban England

A significant number of respondents in our research were dependent on the reliability and performance of residential grade communications services, particularly with respect to the internet. However, this means that when services are disrupted, there can be longer delays in rectifying issues or repairing faults than would normally be the case in a business environment as businesses are also reliant on residential grade support services. Many micro businesses feel they lack negotiating power or leverage with their communications provider that larger companies enjoy.

The Panel recommends that communications providers:

consider the introduction of intermediate contracts which are essentially a residential supply but with enhanced support, as well as improved service levels and response times to service faults. It is vital that: information about such contracts is in unambiguous language; there is transparency about key contract terms and conditions, price and any penalty clauses; and that there is ease of contact to skilled customer service staff. There is also a need to ensure improved co-ordination between multiple providers in the value chain around a single customer – particularly customer-facing and wholesale providers.
better support this growing market sector and look to tailor tariffs and packages to introduce more flexible contractual terms that are currently only available to larger corporations. Additionally, contract terms should not unduly impair businesses’ freedom to switch due to lengthy fixed terms or hefty termination penalties.
consider how these ancillary services can be included as standard as part of a competitively priced core package.

In terms of consumer protection, we have strongly argued that micro businesses should be classed as consumers for the purposes of the Consumer Rights Bill.

Information and Advice:

“We don’t embrace technology you could say, a website would be good but we can’t do that or Facebook until we get broadband. There are so many products to put on it though; we’re not sure how to do it. We did think about setting up a shop on Ebay but we don’t know how to do it, there is no step by step guide.”

craft shop, urban Scotland

The Panel encourages:

Local Enterprise Partnerships, Chambers of Commerce, local authorities and trade associations to consider how they can support micro businesses by the provision of an advice hub.
Government, communications providers and business support organisations to review their current information and advice for businesses in relation to communications services and tailor it as appropriate for micro businesses.
Price comparison websites to offer clear information on data and broadband packages that are relevant to micro businesses.
Ofcom to use its resources to support micro businesses seeking information that enables them to assess and judge different providers’ performance.

A copy of the Panel’s report can be downloaded here (PDF 645KB, opens in a new window)

According to the Business Population Estimate study 2013[3], micro businesses accounted for 95.4% of all private sector business across the UK.

By nation, there is relatively little variation – micro businesses in England and Wales also account for 95.4% of the private sector business population, while in Scotland it is 94.8% and in Northern Ireland 94.7%.

There is, however, some variation in the levels of employment by micro businesses with higher levels of employment as a proportion of all private sector businesses in Wales and Northern Ireland than England and Scotland. In Wales micro business employment accounts for 41.8%, and is 38.9% in Northern Ireland. In England and Scotland the figures are 31.4% and 31.8% respectively.

The percentage of private sector turnover contributed by micro businesses also varies between nations with Wales and Northern Ireland recording higher figures (24.7% and 29.7%respecively than England (17.7%) and Scotland (18.1%).

The research discussion guide can be found here (PDF 529KB, opens in a new window)

[1] Micro businesses are businesses with 0-9 employees i.e. 10 people or fewer including the owner

[2] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254552/13-92-business-population-estimates-2013-stats-release-4.pdf (PDF 332KB, opens in a new window)

[3] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254552/13-92-business-population-estimates-2013-stats-release-4.pdf (PDF 332KB, opens in a new window)