SME leaders will drive the United Kingdom’s economy to recovery in the coming months and years – if they follow this handful of top tips
I spend much of my business life working with small- and medium-sized enterprises (SMEs) and particularly with micro and small companies. Over the last few months of virus-induced struggles, there has been a lot of pain for SMEs, but also a lot of planning happening. And I am quietly intrigued and inspired by what I’m seeing. Here are some tips for SME leaders.
Time to work on the business
The 5.82 million SMEs within the United Kingdom make up 99.9 per cent of the country’s business population, according to government figures from last year. One of the toughest issues for SME leaders is finding the time to work on the business, not just in it.
Most micro-ventures are hands-on, with a small team, flat management, and everyone delivering as best they can. But lockdown has given SME leaders time to reflect on what they do, together with the mental space to plan ahead. By their very nature, single-person and micro-businesses can pivot and flex to address market needs quickly. This adaptability ensures their survival. However, SME leaders must find time to spot trends, evolve new or tweak existing products and services to minimum viable product (MVP) levels to launch into the marketplace with alacrity.
And with the rise in unemployment on the cards in the months ahead, their numbers are set to swell, as many ex-employees decide to join the ranks as self-employed or small-business owners.
Bounce back with a loan
One of the hardest parts of small-business ownership is finding capital for investment. Those in big money are simply not interested – especially at the moment – as they see little upside in this fragmented market. This despite that SMEs generating 51 per cent of all UK business turnover and 60 per cent of employment. Small companies have to turn to banks using overdrafts, loans/leasing and credit cards to fund growth.
During lockdown the government launched its Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS). The former was more onerous attracting larger company applications. Whereas the BBLS, with £2,000-£50,000 lending limits, was incredibly simple and easy to access – provided you had all your tax returns in place. And this was the only support funding available to the 4.5m single-person companies out of all the packages put into place by the Treasury (other than benefit claims). It was not surprising that on day one of the scheme 69,000 applications received £2 billion in loans.
But the UK’s SME leaders are smart. While many will have applied for the loan to support their coronavirus-driven collapsing income, others have quite definitely grabbed this unique offer to boost their business. Cheap, easy money to fund a new product, relaunch a service, upgrade marketing, pivot their offer, develop an app. Those businesses who went into lockdown with cash in the bank have had an additional injection of working capital and will come out punching. Watch this space.
Local IRL and global digital
The pandemic has forced digital reliance into all corners of society and the economy. This behaviour change cannot be rolled back. But allied to this, after all our online chatting, video conferencing, TikTok-ing, we will be desperate to get our arms around each other, to see, touch, smell, sense the nearness and warmth of other people. We are pack animals after all.
The world and streets we will emerge into will look different, though. The collapse of retailers and other national businesses will leave large gaps in the high street and the business economy overall. And where there are gaps, entrepreneurs and SME leaders step in to fill them. The businesses that rise from the ashes will need to fulfil local needs, have short supply chains, use inventive marketing, be developed for the here and now, with the potential to grow into a model that quickly harnesses a digital interface too. This can link smaller regional-based IRL offers to a global audience via digital. I’m already seeing this happening within my client base. And it’s set to grow.
Growth of all small business talent
While recessions are painful and have a long-term impact, they can benefit the economy by forcing hungry adaptive thinkers to start their own small businesses.
According to the Office for Budget Responsibility (OBR), the recession we are facing is going to see a rise in unemployment of at least 7.3 per cent in 2020. People will need to be inventive about how they earn income, generating more self-employment and start-ups. Larger companies will not be hiring either any time soon forcing some of the UK’s hottest young talent to start their own gigs and becoming SME leaders.
This represents a huge opportunity for the country. Support these entrepreneurs, these innovators, these people who have had to “get on their bikes” with business skills, with ways to develop and grow their ventures – no matter the market they are in – and you will bake in growth for tomorrow. Care start-ups should now be seen as of equal value to our society and economy as tech start-ups. The pandemic has shown us that essential work has a different kind of value, but is just that: essential and valuable.
Sustainability will be part of small business culture
Lockdown has seen a shifting of perspectives in unexpected ways. From the appreciation of home, both domestically and nationally to closer family relationships, time to look and listen to nature, the cleaning of cities through less traffic and manufacturing pollution, a slower pace of life. Some areas will revert, but not fully. There will be rapid growth in interest and investment in the green economy with governments leading the charge to gain a leading advantage.
But small businesses will have a strong role to play in this area. Not only through the development of interesting and different concepts, but through recycling materials and upcycling existing products. Some of whom will occupy the empty small retail units in town centres. The rise of buying seasonal local produce, the resurgence of home delivery from local suppliers as well as the appeal of B-Corp thinking to drive a sustainable, inclusive economy for all participants does not need large corporations but can be owned by hyper-local ventures who are closely linked to their communities’ needs.
With their flat management structures and simple decision-making processes, smaller companies can partner and collaborate easily, building effective commercial “honeycombs” of opportunity within their sector, and locality.
So keep a lookout for the small business dynamism that will erupt in the months following lockdown. While there will certainly be some losers, there will be new vibrant small companies and SME leaders emerging hungry for new markets and determined to succeed in the changing world.