By Simon Grace, above, Director & Co-Founder, Charles & Dean
As the UK braces for the fallout of an impending recession, SMEs in particular face the challenge of increasing costs, rampant inflation and reduced revenue. PayPal has reported that around 78% of small businesses see the rising cost of living as being the biggest threat they face. Worryingly, over a quarter fear their business might fail as a direct result of tough financial conditions over the coming year. With the lingering effects of Brexit and Covid-19 still felt by many, the current outlook is one of apprehension as we navigate an unprecedented crisis once again.
Despite these challenges, SMEs certainly have the opportunity to thrive and achieve the ambitions they have set out for themselves during tougher periods. Understanding when and where to seek guidance, and ensure the right measures are in place for the current climate are key to meeting the wider business needs, as well as keeping teams motivated.
Being adaptable and flexible
When coming up against tough external situations, a company’s resilience and ultimate success often comes down to its willingness, speed, and capability to adapt and respond. The businesses with the flexibility to roll with the punches have fared measurably better than those lacking a fast-acting ability to protect operations, technology, and employees from crisis and chaos. We need only look at those that succeeded during the pandemic for evidence: according to McKinsey, the most resilient companies were 11% more profitable in 2020 than in 2019.
In sectors such as manufacturing, agriculture, or engineering, there is increased demand for automation solutions as they look to adapt to rapidly changing service expectations, current labour shortages and the accessibility of powerful digital technology. Aside from providing resilience in the face of these business challenges, these automation technologies are making significant improvements to productivity – potentially bringing it to a higher level than the previous ‘normal’.
The strength and success of a company can be determined by being ready with productive business processes in place that can deal with changing situations. Focusing on resilience and increasing flexibility has and will continue to enable businesses to succeed in an expanding, shifting work environment, as well as to be better positioned for when the next disruption comes their way.
Understanding your options
Understanding the role of finance and the options available can be the key to enabling prosperity and growth. Financing can seem like a daunting prospect: traditional high street banks may represent a barrier to growth for many SMEs as their lending criteria grows more stringent and rigid product ranges may not address their specific needs. Nevertheless, suitable funding can be secured through alternative routes – specialist brokers for SMEs provide guidance on investing and expert support to help fund assets that can directly translate into increased productivity and growth. Such options offer a blend of innovative solutions, specialist advice that aligns with business objectives, and the tenacity to secure funding whatever the circumstances. This type of partnership can prove invaluable for SMEs, particularly during more challenging periods.
More often than not, smart decision-making and the effective implementation are a question of timing. For example, with energy costs soaring and increased focus on sustainability, many may now be looking to invest in greener solutions. Due to the lower costs associated with renewable energy, SMEs that have taken measures to operate more sustainably often find themselves more competitive – both operationally and financially – and hence more resilient to the long-term threat.
Yet again, there are options available to businesses here. While significant initial outlay costs may present a substantial obstacle to a green transition, becoming resource-efficient through longer-term asset financing can make carbon neutral targets – and lower energy bills – much more attainable.
Looking after the team
In recent years, company culture has evolved considerably with businesses now needing to balance flexible working practices and place a continued emphasis on mental wellbeing. Such changes are welcome and show a willingness from employers to actively engage in the lives of their employees. Not only can this help drive recruitment, but it can foster confidence among existing employees and keep them motivated and productive in a complex, ambiguous and fast-changing world. Key values embedded in the company’s culture can be communicated within the workplace and, by extension, the customer experience, which helps drive retention and long-term loyalty.
What’s often overlooked is the experience of the founders, who can find running a business a lonely experience, especially when the outlook is more worrying. Prioritising transparent communication and demonstrating a willingness to ask for help from all levels builds a resilient, trusting and inclusive community that makes it much easier to perform under pressure. There are also many opportunities for businesses to seek external support with financial management, especially during economic turbulence. Specialist advice and support can be given by these services and are tailored towards making sure businesses are getting the most out of their finances.
The next generation of SMEs
The lessons learnt over the past two years means that many SMEs are better-equipped than they may think to navigate the obstacles ahead, especially in understanding how to maximise opportunities in times of uncertainty. Maintaining resilience, seeking support, and keeping teams motivated are key to unlocking their potential; this way, ambitions for 2023 can be set firmly on growth.