British SME’s: what’s the future looking like for small and medium business enterprises?
Recent research has revealed that 1.6 million UK-based small-medium enterprises (SMEs) consider it “normal” for their revenue to halve or double depending on the time of year. While these fluctuations in revenue can make cash-flow management quite difficult, the future continues to look bright for UK SMEs. Increasing numbers of business owners and decision-makers agree that the services they use and offer need to be scalable, flexible and willing to adapt.
Many SMEs tend to take an “ad hoc” approach to cash-flow management, which can lead to issues. For a company to run as smoothly as possible, it requires a “float” of readily available cash to carry out its daily obligations. However, the adaptability of the UK’s smaller businesses in recent years’ regarding the outsourcing of work means that most are capable of weathering the storm in the leaner months while reaping the rewards during busier times.
A bright future ahead
Despite concerns over fluctuating revenues (with over one-quarter of SMEs in agreement that cash-flow could be a concern during quieter weeks) the future still looks rosy for UK business. In 2017, over 380,000 new businesses were registered in the UK – with just under a quarter of them beginning life in London. Technological advances and the increased flexibility offered by hotdesking, freelancing from home and outsourcing to other countries were just some of the reasons thought to be behind Britain’s business boom.
Fears of the likelihood of political events to affect the growth of UK businesses seem to have subsided during the third quarter of 2019, with evidence of growth helping to ease recession fears. In the three months leading up to July, the economy grew by no less than 0.3%, despite uncertainty over Brexit. Most of this growth was witnessed in the services sector, which accounts for approximately 80% of the entire UK economy and includes thousands of small-medium enterprises.
Rapid expansion of SMEs
Controlling employee numbers has been a challenge for many businesses of late. Nearly one-quarter of UK businesses have had to employ more staff during moments of rapid expansion during the past year. 53% of SMEs also reported an increase in revenue during the same period. While the uncertainty of newer businesses who face projected downturns means that flexibility is key when it comes to hiring (such as freelancers and non-fixed temporary contracts), the overall picture is that UK business is in a picture of rude health – particularly among “microbusinesses” (organizations which employ less than ten employees). It’s estimated that there are now 2.4 million micro-businesses helping to prop up the UK economy.
Technology boom
Small start-ups focusing on AI and other new forms of technology are also helping drive innovation within the UK economy. The importance of automation in the future of everything from manufacturing to robotics has led to a Parliamentary business committee to recently call for new tax breaks for small businesses who specialise in these industries, in an attempt to make such companies more attractive than their foreign rivals.
Resilience
Fluctuating revenues and demand show us that smaller company operators and owners are amongst the most adaptable and resilient business leaders in the country. Despite encountering months of negative growth, UK SMEs continue to go from strength-to-strength. However, one important aspect which is perhaps overlooked by smaller businesses is insurance. Both laws and insurance policies differ depending on the size of a company and the number of employees it has, and it’s important for companies to take responsibility to update their policies as and when required.
Failure to do so could result in a business being under-insured during busy periods, or over-insured during leaner ones.
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