Running your own company can be a lonely business. You have to make big decisions on your own. Often, there is no one to ask for advice. And business owners can feel they have little control over things affecting their organisation, from spiralling utility bills to the litter clogging up the high street.
But more SMEs are joining together to identify collective solutions to common problems by forming Business Improvement Districts (BIDs) to improve trading conditions in their local area. About 170 BIDs exist across the UK already, ranging in size from a handful of traders in a single street to the New West End Company, which has more than 2,500 members and covers some of London’s biggest shopping thoroughfares.
If you’ve not heard of BIDs before, you may be wondering how they work.
What are BIDs?
Put simply, they are groups of businesses in a defined area who vote on what commercial improvements might be implemented locally. Proposals are agreed by the members of the BID group – the local business owners themselves – then the changes are implemented and paid for by a small levy paid by most firms, usually calculated on their rateable value, typically at one per cent. Some BIDs exempt the smallest companies from paying anything at all. Once all the individual levies are added up, the annual income of BIDs ranges from less than £50,000 a year for the smallest groups up to more than £2 million for the largest. Typical incomes are in the £200,000 to £600,000 range, with all the money available to spend on the businesses’ chosen projects in the vicinity.
What improvements can BIDs make?
It can be almost anything. Tidying up shopping areas. Improving the marketing of a town or district. Even linking firms together to negotiate better deals on bills and services, such as waste management. Several BIDs have managed to get utility bills down by as much as several thousand pounds a year per company through group purchasing. Another BID based in Sheffield was set up specifically to create a much-needed flood defence scheme.
What are the advantages of BIDs to businesses?
There is power in the collective element of BIDs, and businesses are given a voice on issues affecting them, as well as having the money to make the changes necessary. Many firms have also reported increased footfall in more attractive and better promoted town centres, improved staff retention, good networking opportunities with other local businesses, and help when dealing with the council or police, as well as when procuring goods and services.
Mark Ross, BID Programme Manager for the Association of Town and City Management (ATCM), explained: “At first, most BIDs in the UK were focused on making areas cleaner and greener. But more recent examples, like the BID in Camden Town in North London, have been about economic development and regeneration. Camden’s encouraging creative businesses to set up in the area and fill empty premises, and you’re seeing things like pop-up galleries appearing there.”
That SMEs operating on the High Street need all the help they can get is evident, with retailers suffering particularly badly in the recent economic downturn, as well as due to the growth in online shopping. A somewhat depressing report by the Distressed Town Centre Property Taskforce last month suggested that many towns and cities needed fewer shops and more housing and leisure facilities in their centres. The chairman of the taskforce, Mark Williams, concluded: “There’s still a need for vibrant retail, just less of it.”
The taskforce was formed after the publication in 2011 of a review of the British High Street by Mary Portas, the self-styled Queen of Shops. While she pointed out the reasons why many town centres were in decline, Portas also singled out BIDs as one potential way to stop the retail rot. A recent study of BIDs in the London area found that businesses operating in parts of the capital covered by a BID saw their turnover grow by an average of four per cent between 2005 and 2012 – those years including the double-dip recession, don’t forget. During the same period, the turnover growth of companies in London was otherwise static.
But how can businesses go about setting up a BID in their area? The National BIDs Advisory Service, run by the ATCM, recommends:
- Get in touch with the economic regeneration team in your town centre, council or local Chamber of Commerce, if such a figure or group exists. The ATCM can also be contacted for advice on how to get started with a BID proposal.
- Think about why you want to set up a BID. Is there a particular problem with crime in your area, for example? Do you want to keep the local tourist information centre open to attract more visitors to your town? Would sprucing up the common areas of the centre and introducing street entertainers increase the number of shoppers? Do you have a number of points that need addressing?
- Businesses must devise their BID proposal or business plan through consultation, setting out their priorities for improvements for the area, as well as the budget and how the BID will be managed. Once this is agreed, this proposal goes to a ballot, which is usually run by the local authority. All businesses that would be eligible to pay the levy are given a vote on whether they want to form the BID group.
- A winning BID is one that gets a straight majority of yes votes and a majority of the rateable value. This ensures that both large and small businesses’ interests are protected.
Not all BIDs are successful. Some business owners vote against them, often citing the cost of the levy as a deterrent. But the vast majority of towns that create a BID vote for them to be renewed once the typical five-year term is up, and many BIDs are on their third term already. What is certain is that no one understands the pressures that SMEs are under better than fellow small business bosses. Talk to other local firms about what might improve business conditions in your area. Find strength in numbers. A BID may be just the thing to give your companies the boost they really need.
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