Small and medium sized businesses (SMEs) are the engine that drives the UK economy, accounting for more than 50% of private sector turnover and 99% of the 5.7m businesses trading last year. Yet recent figures suggest all is not well amongst our vital SMEs.
Companies House figures showed 589,008 new businesses set up shop in 2017, down from 657,790 the previous year – the first drop since 2010. Meanwhile, the latest UK Innovation Survey revealed the number of ‘innovation active’ SMEs has also fallen, with the gap between SMEs and larger firms nearly doubling.
Added to that, UK businesses have a long-standing problem with scaling. Ranked third in the world by the OECD for start-ups, the UK is ranked only 13th for scale-ups, an issue that impacts hugely on our economic and employment potential.
And with Brexit on the horizon and the British Chambers of Commerce recently showing that the UK’s overall growth is at its lowest level since 2009, we need our SME engine more than ever.
So, what’s holding SMEs back and how could the right technology help?
SME pain points
Research by 9 Spokes shines a light on some of the challenges that could be limiting SMEs in reaching their full potential.
There’s an old adage: ‘Fail to plan, plan to fail’; yet we found that the majority – two thirds (62%) – of SMEs take a very informal approach to deciding their strategy and goals, a factor that could be seriously limiting their growth. SME owners are also hugely strapped for time, with more than three quarters (77%) saying they wish it was easier to find the time to get everything done.
When asked for more details on their biggest pain points, these included managing cash flow, recruitment and retention and winning new business. Many also have to spread their time and attention across multiple sites, plus source and negotiate with suppliers. Then on top of that, they face uncertainty around Brexit and how it could impact their costs and recruitment in the future.
Crucially, we also found out that many businesses do little to monitor business performance, with smaller businesses claiming that they get ‘a feel’ for how they’re doing based on footfall or staff turnover. They’ll check their bank balance, see whether they have enough to pay their outgoings and if they do, assume they’re doing well.
The role of technology and data
You might imagine that small businesses have a multitude of tools at their disposal to help them manage their day-to-day operations, but our research shows that this isn’t usually the case.
While we are definitely starting to see a generational shift, with data-native millennials seeking out new tech, many business owners aren’t very tech savvy at all, preferring traditional approaches such as Excel spreadsheets, or even writing rotas and forecasts out by hand.
Others are frustrated by the business support software available and reluctant to explore technologies that could help them run their businesses. As a result, they’re missing out on valuable business data that could give them greater visibility of their operations, helping them to make informed decisions, be more strategic and reach their business objectives.
A new wave of business intelligence
Yet, while some SMEs see business software as ‘too complex’, many of them are happily using apps on their smartphone once they leave the office, unaware that they could have the same experience – and convenience – at work.
Today’s business intelligence tools and apps tend to be incredibly user friendly, so people with any level of IT knowledge or experience can use them—and use them well. There’s an app for almost anything you’d like help with—from managing late-paying debtors, improving customer support or managing inventories.
Ultimately, the right business software gives you more control over any and every aspect of your business. And more control means more time, and more head space, to focus on growth.
Andy Birch, VP EMEA, 9 Spokes