Small and medium companies, or SMEs, are an integral component of the UK economy, creating millions of jobs and helping boost growth tremendously.
With recent figures showing that SMEs employ almost 15 million UK workers as well as providing an annual turnover of a staggering 1,600bn, it comes as no surprise that providing support for these enterprises is a key part of the UK governments plans for 2014.
Despite this value, what most people dont consider is the strategic importance of SMEs. They are a hugely critical element of both our local and global supply chains whether this is through supplying gearbox parts to Jaguar Land Rover, or specialist, niche food products to our supermarkets.
Consequently, SMEs provide a great diversity of products that support the UKs and worldwide multi-nationals. It is for this reason that small firms are key to not only delivering economic growth forecasts during 2014, but also in ensuring the UK economy remains on track with its economic recovery.
In the past, however, SMEs have faced considerable challenges which have included: obtaining credit in the key start up and growth phases, restricted IT resources, and the cost of attracting new customers worldwide, who are not keen to part with their precious limited budgets in times of economic woe.
Lack of confidence
While they may aspire to compete on the global stage through expanding into new markets either directly or online, it is apparent that the confidence to achieve this has been lacking in recent years.
One of the main stumbling blocks is that the majority of SMEs still use outdated, B2B manual systems when trading. These not only hinder growth, but also make them less attractive to do business with.
With the advent of the internet, though, the cost of B2B e-commerce has fallen dramatically, and is now well within the budget of the smallest of small firms, requiring no IT team to operate them.
The benefits are enormous, and along with reducing printing and postage costs, improving customer service, and enhancing access to alternative finance, these e-commerce systems are also what every large multi-national company uses. So, the ability to do B2B e-commerce means that SMEs can now approach and secure new customers, gaining valuable new sources of revenue.
Modernising electronic B2B capabilities helps the successful expansion into new markets around the world, by making the SMB easier to do business with. This potentially provides access to thousands of companies with a low cost, automated system to manage new business and save precious time.
One such example is audio equipment design company Roth Audio. This UK-based company has a team of less than 10 people, yet is able to supply customers in Europe, the US and Asia Pacific both cost effectively and with high customer satisfaction levels, due to its decision to adopt electronic trading since launching.
The need for an SME automate its electronic B2B processes, such as orders, invoices, shipments, customs and payments is therefore critical. Around the globe, large companies are increasingly automating these systems, along with their finance, treasury and procurement departments.
Consequently, when a multi-national looks for a new SME supplier, these automated processes are often mandated, and if not, almost always preferred.
While perhaps unnerving at first, once adopted it makes exporting easier for the SME, through providing increased visibility into their business transactions. It has the added benefit of making small companies more attractive to other potential customers both in the UK and internationally, due to the efficient manner in which new trade can be established.
Additionally, SMEs that adopt efficient and flexible electronic trading solutions will quickly find out that it will also help when looking to branch into new markets. Often differing countries and industries have varying processes, for which SMEs e-commerce solutions need to efficiently adapt.
For example, if you compare North America to the UK in terms of business documents exchanged between suppliers and retailers, retailers in the former usually require a wider range of different electronic documents to be exchanged around five or six more on average, partly because they have already automated more of their business processes.
A final point to consider is the enormous benefits of outsourcing logistics and supply chain management from an SME point of view.
By allowing experts to handle the technical details, smaller businesses can concentrate on what they do best selling their products.
The options available are ever increasing, and now include web forms, software, network and cloud/hosted options. This can really help, especially if the SME selects a provider with a global footprint that is already familiar with these requirements, and has an available solution which already accommodates these different automated processes.
This all is just a brief snapshot of the benefits electronic business-to-business can provide. Any SMB wanting a thriving future should consider adoption of this technology or risk being left behind.
Denise Oakley is international marketing director at B2B integration specialists GXS.