2016 has signalled the beginning of new and uncertain times for our economy. Outlooks and predictions are forcing us to look at our futures through a pessimistic lens. However as we celebrate the sixth Small Business Saturday this year, small and medium-sized enterprise (SME) owners must not forget that they are the foundations supporting the British economy, and we look to them now more than ever. We need them to remain confident.
SMEs make up an astounding 99.8% of the British economic engine, generating 47% of revenue and employing 60% of the workforce. However, research undertaken by the Office for National Statistics in 2014 identified that the difference between successful and unsuccessful start-ups is confidence. Simply put, company closure rates decline the longer that company is in existence as businesses learn, become more resilient, adapt to change and build confidence. In the face of big company buy-outs, it is important that small businesses across the UK remain brave in the face of uncertainty. Britain is known around the world as a hub of innovation, and if we continue to close down or sell-out, we’ll never truly blossom and nurture our potential as we are forced to follow suit of strongly-structured bigger businesses.
Too many great British tech businesses in particular, are acquired before they fully develop - DeepMind, the AI company founded in Cambridge in 2010 and acquired by Google in 2014 is a great example. While it’s a sign of success that world leading organisations like DeepMind or ARM Holdings can emerge and prosper in the UK, it’s also the case that now more than ever, we need more like them to prosper and remain British owned, creating the best local conditions for others to follow in their footsteps. Fund injections for VCs to invest in formation and growth is exactly what is needed to help make this happen, however, it’s something that must be spearheaded by Government too.
As an SME owner, you’ll have had your own battles and hardships en route to success, so it’s time to fight again. Here are some tips for staying strong in the face of unpredictability:
- Intelligent investment is your saviour: Companies that have grown versus those that have stayed static, as shown in research undertaken by Xero earlier this year showed that those investing in tools and technology within their business operations have an increased likelihood in a strategic approach, as well as a positive outlook on growth ambitions.
- Collaboration is king: If you feel embarrassed that you need to reach out and seek advice, then change your mind-set. Visit online forums within your industry and pick up on learnings and trends, stay ahead of the curb and don’t stay alone on your island, or enlist the support of mentors and advisers. After all, a third of successful entrepreneurs say they have called on a mentor, compared to just 14% of respondents who ran businesses that had to close.
- Finances come first: Of businesses who fail in the first five years versus those who succeed, a huge 65% blame financial issues. It will seem obvious, but being able to analyse and forecast your trends is vital to succeeding in a tricky economy – invest in easy-to-use business software to stay on top of your balance sheets.
- Rigorous recruitment is your staple: Interviewing staff that will take your company forward will make or break you, and references will be as important as the interview itself. How did they go above and beyond their past role to help their business strive for growth? Innovation and initiative are two key skills that you’ll need for 2017.
By Gary Turner, UK managing director and co-founder of Xero