• Thursday, July 18, 2024

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Why Expansion Might be Profitable During an Economic Downturn

By: Eve Samuel

The Asian business community has always been a boon to the British economy. Indeed, when you look back over the years, there has long been a strong entrepreneurial spirit within the community. For example, in a 2007 report by the Mayor of London’s office, 13% of all businesses in the capital were Asian-owned. Fast-forward 10 years, and research from the Economic Policy Group shows that 203 Asian-owned businesses in London created almost 15,000 jobs and generated £2.7 billion in turnover. Coming even further into the present, IBIS World reported in December 2023 that there are 13,259 Asian restaurant businesses in the UK.

The Asian Business Community Has Room to Grow

One interesting point to take from these reports is that, in general, Asian businesses are, as noted in the 2007 Mayor of London’s report, “relatively small”. As per the report, 83% of the Asian businesses in London have between one and four employees, compared to the city’s average of 77%. So, while the entrepreneurial spirit among the Asian community is strong, there’s room for growth. That’s easy to say and harder to do, particularly when the UK’s economy is far from buoyant.
GDP is on the up in 2024 [1], but it’s still tough out there. When times are tough, most business owners consider cutting costs. That’s often a sensible strategy. In fact, there’s nothing wrong with battening down the hatches and sitting tight during recessions. However, there’s also something to be said for expansion during tough times. You can see why this line of thinking makes sense on a general level. If everyone else is tightening up, a business that’s willing to spend could get ahead of the pack.
Drilling down into specifics, an article by the Nigel Wright Group, one of Europe’s largest recruitment specialists, argues that hiring during an economic downturn is a positive [2]. As written, businesses can leverage the increased demand for jobs due to the lack of openings. Because of this, it’s theoretically easier to attract “high-quality candidates who may have been out of reach during periods of economic prosperity”. This point applies in the UK and the world at large.

There Might be Opportunities During Tough Times

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The UK isn’t an outlier. The global economy is struggling, which usually means there are opportunities to recruit high-quality individuals from overseas. Bringing this back to the Asian community and the fact a lot of businesses are “relatively small”, now could be an ideal time to recruit. While it’s not a necessity, if you have surplus capital and feel like expansion may work in your favour then it’s worth considering.

Let’s assume you’re willing and able to expand. There may be local recruitment opportunities and hiring people from the UK is fairly simple from a legal perspective because you don’t need to deal with visas. However, if you want to recruit talent from overseas, there are systems that need to be followed. For example, government data shows that 69,241 received a Skilled Worker visa in the year ending June 2023. This shows it’s a relatively reliable way of recruiting international talent if both sides follow the rules.

As of April 4, 2024, the Skilled Worker visa changed slightly. The minimum salary is £38,700, which is up from £26,200. However, in cases where the average salary in your industry is higher (aka the going rate), you must pay a skilled worker at least that amount. Factoring in this cost is essential if you want to hire talented workers from overseas.

That’s not the only variable you need to consider. The skill level requirement is RQF Level 3, which is equivalent to A Level standard in the UK, and workers must be proficient in English. That means you have to be diligent in your searches, which can take time.

Consider the Costs Before You Make a Move

There are other costs to consider. Companies wanting to hire people from overseas need a sponsor licence. A worker licence costs £536 for small businesses and £1,476 for medium and large businesses. Then there’s the cost of the liability insurance you need before you apply for a licence, as well as the cost of employing legal experts to help with the application process.

Put simply, there are several costs and considerations, which is why businesses venturing into the world of international recruitment should seek the help of immigration lawyers such as Reiss Edwards. All that being said, there are potential upsides to recruiting and trying to grow when businesses around you are tightening their proverbial belts.

Further Reading

1. UK GDP is on the up in 2024

2. Recruitment advice during tough economic times

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