Entrepreneurship from SMEs will be a key catalyst of the economic recovery in 2013
Entrepreneurship from SME’s will be a key catalyst of the economic recovery in 2013
David Taylor, CEO of James Caan’s firm Hamilton Bradshaw Venture Partners, offers his advice to SME’s on growth strategies for a successful 2013.
With the tentative growth figures predicted for 2013 and 2014, and the UK predicted to see the strongest growth in the Eurozone, now is the time for SMEs to think about their growth plan. There are several successful strategies that SMEs can conceptualize in order to format a plan up for the present, and then implement in the coming months in line with the UK’s growth. The first point of action for SMEs is their export market. We are already seeing the UK export growth to developing nations, especially the BRIC block, in double figures, so this is clearly a rich seam for other SMEs to explore. This is backed by a pledge from George Osborne, who has stated his target to double exports to £1tn by 2020.
The role of SMEs cannot be understated. There are 4.5m SMEs in the UK, employing 13.8 million people, so 6 out of 10 people in the UK who work in the private sector are employed by SMEs. This has a huge impact on Britain as a whole, and it has often been stressed that the key to the UK recovery lies in the SMEs.
Ex-dragon and serial entrepreneur James Caan has spent the past thirty years buying and selling businesses in the UK. “Small and Medium Sized Enterprises obviously have a huge part to play in the UK economy recovery. Now is the time for them to be focusing on growth and expansion, which in turn will lead to the creation of more jobs. It’s been a challenging period for SME’s, but it’s important for them to focus on using the skills gained during this time to apply new strategies’ for growth in 2013.”
Along with the governmental promise, there is also increasing encouragement from the banks. Neil Jones from Lloyds TSB said "Now is a good time to export. The bank is very keen to support the government in its efforts and we work closely with UK Trade and Investment," he said. "My job is to demystify exporting and international trade and I would advise people to talk to their bank early to identify their opportunities and also what challenges there may be."
For those deciding on international expansion, it is worth bearing in mind that the easiest way for SMEs to enter international markets might be by partnering with a local business. The recurrent issues for SMEs are usually lack of research and a lack of partnering when accessing foreign markets, and therefore knowing someone who knows what to do and who to speak to is invaluable.
Another strategy that I strongly recommend is to make sure that the utilisation of digital resources is optimised. The Lloyds Banking Group’s new SME Digitisation Report has stated that UK SMEs could be putting future growth at risk because they are not making use of the Internet to increase productivity.
The report, shows that 37% of UK SMEs still do not have a website, and that 20% are & lsquo;deliberately disconnected’ from the Internet. In order to keep up with the market these are statistics that really do need to change, otherwise I suspect that those SME’s will be the ones to fail in 2013.
Despite the large number of businesses that lack digital skills, the report also reveals that, on the other end of the spectrum, just over a quarter (28%) of SMEs have an advanced website, including mobile applications, to help serve their customers and employees. These businesses are aware of the commercial benefits of having a strong digital presence. They are also likely to have experienced growth in the last two years and are open to new and innovative approaches as a route to further expansion.
The research shows that businesses that do take steps to improve their & lsquo;digital maturity’ report several benefits:
- 78% save time due to automation and electronic communication
- 62% attract customers through effective marketing
- 54% note improved levels of customer interaction and service and wider geographic coverage
- 54% see costs savings
- 51% report greater sales
- 36% enjoy simplified payment processing
The final point that I think SMEs should focus on, is the confidence they can have in continuing progress. A survey of Guardian Small Business Network readers has revealed SMEs are faring well despite a backdrop of economic uncertainty.
Although more than half of respondents feel unstable economic conditions are a continuing challenge small businesses have to contend with, the majority have seen their company grow in the past 12 months. Only 16% of those polled say their business has declined over this period.
Research undertaken by new British challenger bank Aldermore shows that although the economy remains on its knees, SMEs are anticipating growth during the year ahead as a result of more intensive sales and marketing activities.
55% are expecting either a modest or significant increase in turnover during the year ahead, driven by greater sales and marketing activity. 38% say they expect business levels to stay the same and only 7% anticipate a downturn in fortunes next year.
Going forward it is undoubtable in my mind that entrepreneurship will be a key catalyst of the economic recovery. SMEs are often quoted as the backbone of the UK economy, and it is through them that growth can be achieved. UK workers must be empowered with belief, drive and inspiration, and be allowed the ingredients needed to succeed, some of which may be out of their control – favourable market for example – but most of which certainly won’t be. I strongly urge all SMEs to begin to look at their future growth plans and assess their future needs right now.