According to the CEO of cloud-based HR software provider breatheHR, were witnessing the rebirth of the SME with small and medium-sized business emerging from the last recession leaner, stronger and better equipped than ever before to compete in the marketplace.
He noted the fact that SMEs now account for 99.9 per cent of all private businesses in the UK and have a combined turnover of 1.2 trillion. Our SMES are once again thriving at pre-crisis levels, he said. It might counterintuitive but Richards believes that the stimulus behind this new drive and energy among SMEs is the last recession.
For years, SMEs have struggled with an over reliance on admin and internal process, so when the recession hit many businesses simply didnt have the skills, processes or technical infrastructure to adapt,” he explained.
However, as the recession started to tighten its grip, seeds were being sown that would ultimately revolutionise the way in which SMEs operate. The emergence of technologies such as cloud-computing, coupled with the availability of high-speed internet access, smartphones and tablets created a perfect storm and helped level the playing field.
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Traditionally, only larger organisations were able to afford to access the kinds of powerful business software capable of driving large scale efficiency savings. However, the emergence of the Software as a Service (SaaS) model has meant the businesses of all sizes can now benefit from numerous different services, argues Richards.
As SMEs have had to learn and adapt in a harsh economic environment, were now witnessing the rebirth of the SME,” he claimed. Its emerging leaner, stronger and better equipped to compete. The smaller and medium-sized businesses that are thriving are those who have fully embraced the cloud and are using it to streamline every element of their business process from accounting, to HR, to collaborative working and beyond.
As a result, he believes the use of cloud-computing services by SMEs has grown and at such a significant rate that UK SMEs are now the heaviest cloud software users (defined as having three or more different cloud products in place) in Europe and the second heaviest in the world (after the US). Meanwhile, just under half of SMEs (47 per cent) now use at least one cloud business software tool.
More and more SMEs have woken up to the value of flexible working too. The idea of flexible working wasnt really given the time of day by many business owners when the recession took hold,” said Richards.
However, shifting attitudes have seen managers slowly waking up to the numerous benefits that flexible working offers, including better productivity, lower overheads and better staff retention.
“With the government making it a legal requirement for any employee working for a company for more that six months to be able to request flexible working and expect a response, flexible working is set to grow considerable in the coming years.
But with 38 per cent of job seekers now looking for flexible working when considering which jobs to apply for, according to employment website Jobsite, small to medium-sized businesses can no longer afford not to consider flexible working options, he added.
Those SMEs that are thriving are also the ones which are ensuring that their staff have digital skills. According to Richards, only a quarter of SMEs report that they do not possess basic digital skills, while one in five consider that they have a poor technical understanding of areas such as customer relationship management (CRM) systems, using social media, creating/developing a website and digital marketing. This increase is due to initiatives by both the government and large corporates.
Diversifying their businesses so that theyre not reliant on just one or two clients too long a default position by smaller enterprises has also improved the their performance, according to Richards. The UKs SMEs are taking advantage of new types of alternative financing too.
The fact that the banks having been unwilling to lend to SMEs has paved the way for a new breed of alternative funding providers and platforms to emerge, and today’s small businesses have access to wider variety of funding options than ever before,” he said.
Richards pointed to data from business funder Fleximize that found the alternative funding market has increased in value from 267m back in 2012 to 1.74bn in 2014.
He added: This is clear evidence that more and more new businesses are finding the funding they need to grow and succeed.