Small businesses--and the individuals who run them--have a lot on their plate. They’re dealing with a wide range of issues that need to be addressed just to achieve business as usual.
What are the major priorities SMEs are concerned with? We’ve come up with five major priorities that small businesses are likely to share:
Growth through investment
According to research by asset-based lender Independent Growth Finance (IGF), the growth and funding ambitions of SMEs have strengthened during 2019. Despite the uncertainty caused by Brexit negotiations, 73 per cent of small businesses said they expect to see their revenues climb in the next 12 months, and increase from 69 per cent at the start of the year.
The same research found that three-quarters of businesses are looking to secure funds in the next 12 months, with those seeking to raise funds to support growth seeking an average of 22 per cent more than at the beginning of the year.
This is substantiated by the latest BVA BDRC’s SME Finance Monitor, which found that around 5.7 million SMEs are currently searching for finance, with around half of those looking for growth finance.
Improved skills base
SMEs are struggling to find the people with the right skills, with eight out of 10 SMEs struggling to find new recruits with adequate skills, according to a poll by coworking company The Brew by rent24.
The study of 1,000 business professionals at SMEs found that 36 per cent cite a lack of learning or progression opportunities as a major cause of a lack of skills, while 30 per cent put the skills shortage down to an inadequate social scene or work-life balance in the business culture.
Another study, commissioned by Close Brothers Asset Finance, found most SMEs feel the recruitment process discriminates against older workers, meaning small businesses are missing out on the benefits of employing experienced older workers.
And this issue is costing small business money, according to research from recruitment company Robert Half, which found that the average UK SME faces a skills gap that may impact total revenue by up to £145,000 in the next year, rising to £318,000 in the next five years.
Therefore it’s unsurprising that 53 per cent of SMEs are planning to increase the benefits they offer staff over the next two years in a bid to attract and retain staff in the face of competition from bigger firms.
Better cash flow
Nearly half of UK SMEs (44 per cent), roughly 2.5 million businesses, are struggling with cash flow. According to research by Bibby Financial Services, half of UK SMEs have turned to quick-fix funding, with 26 per cent using credit cards, bank overdrafts and borrowing from family and friends.
Indeed, 24 per cent of SMEs flag late payments as a challenge. The latest ICAEW Business Confidence Monitor (BCM) found that late payments from customers are a key and growing concern among businesses, particularly SMEs.
A major reason for this is smaller businesses are having to wait for payments from larger companies they have performed work for. In fact, data released by fintech Previse shows slow payments are concentrated among small suppliers, with the smallest suppliers paid 30 days late while firms charging the largest invoices are paid, on average, less than a day late.
Cyberattacks are a growing problem for all businesses, and a report from cyber insurance firm Gallagher found that 1.4 million British SMEs were affected by a cyberattack or significant security incident in 2018.
Gallagher's survey of over a thousand UK SMEs found incidents such as cyberattacks, extortion, industrial espionage and terrorism are becoming a growing concern for small businesses everywhere. According to Gallagher, the alerts cost the UK economy £8.8 billion overall, with the average attack costing nearly £6,500 to resolve.
Nearly a quarter (24 per cent) of respondents said they had been affected by one of these issues last year, with one in six (17 per cent) SMEs spending £10,000 or more to combat an incident, with nine per cent paying out more than £20,000.
Continuing political and economic uncertainty has taken its toll on small businesses, with research suggesting Brexit has cost smaller firms over £1 million each in lost revenue and turnover in the past three years.
In response, the Federation of Small Businesses (FSB) called on the Chancellor, Sajid Javid, to bring forward radical interventions to address an unprecedented long-term slump in small-business confidence, slowing economic growth and a widening trade deficit. The group also called for a major reduction in business rates bills for small firms, as thousands struggle to stay afloat amid spiralling operating costs.
FSB’s research shows that among the 39 per cent of small firms that believe a no-deal scenario will negatively impact them, only 21 per cent have planned or prepared for anticipated issues and 63 per cent don’t believe they are able to plan.