In the wake of the UK’s impending move out of the European Union, and the uncertainty that has brought about, there are reasons to remain positive. The economy is relatively buoyant right now. The widely-predicted Brexit-imposed economic downturn has yet to materialise according to the Bank of England, average earnings in the year to May were up 2.3% and the Office for National Statistics says more than 74% of working age people are now in employment – a record high. However, if you’re an owner of a small or medium sized enterprise (SME), these nuggets of positivity are likely to have washed over you. If you’re still lying awake at night, tossing and turning in anxiety at what may or may not lie ahead, you’re not alone.
Here’s the 7 issues causing the biggest headaches for small businesses right now.
The latest Company Check Business Census report suggests that the majority of SMEs note recruitment as the outright No.1 issue giving them greatest cause for concern in 2016. Finding great people, brining them on board and then keeping hold of them is a big ask of any small business. Then there are the costs associated with hiring – from expensive agency fees and buying new equipment, to extra training and finding new salaries. In fact, the costs can range from 1.5 times to 3 times the salary of the position you’re trying to fill.
2. Increasing profits
Do you ever feel like you’re working harder than ever only to be making the same amount of cash at the end of each month? Well, for most small businesses, increasing profits is one of their biggest hurdles to overcome. Of course, asking new or current clients to pay more is the simplest route to profitability, albeit one that might require tricky negotiation or repositioning of your business. However, there are numerous ways to boost profits through cost reduction – not necessarily in staffing, but in things like IT infrastructure, energy use and logistics. Continuous optimisation of your business processes is the answer, as you try to find that sweet spot of profitability.
3. Managing cash
While turning a profit is the raison d’être for all businesses, staying on top of the day-to-day running costs that keeps your business alive remains a big concern. And with clients stalling payments, unexpected outgoings, and ongoing bills to service, it’s an easy trap to fall into. Solid budget and invoice management is key, as is finding a smart way to manage your stock so you don’t have cash tied up in assets unnecessarily.
4. Knowing when to embrace change
As the author Ray Palla once said: “If you’re not evolving with the times, there’s a pretty good chance that you're stagnant, dying, already dead, or just a rock in someone’s shoe.” The speed at which technology and media is changing makes it incredibly difficult to keep up and many SMEs struggle to determine when to embrace the changes and make the necessary investments which ensure they stay relevant and able to compete against newcomers. Suffice to say, not everything that is new works well, but failing to try new things can leave you out in the cold (and out of business).
Recent intel from the Forum for Private Business (FPB) says that worries about time are more pertinent than those about money among the small business community. In fact, 36% of SMEs told the FPB that a shortage of time is the major challenge to their growth plans. As a boss, if you lack the free time to think about and plan the future direction of your business, you have a problem. It’s time to delegate some of your day-to-day tasks (something 46% of owners say is the biggest drain on their time) and use the skills of others around you to find that much-needed head space.
6. Hidden costs
Xenophobia, or fear of the unknown, is a well-known psychological construct. And it is the hidden costs that hit us from time to time that gives rise to much anxiety among small business operators. Banking charges are a good example of the unexpected costs that spring out to catch us unawares – from making withdrawals, to transfers and telephone banking services. New analysis by Money Mover – a web platform designed to make international payments cheap, easy and transparent – suggests that banks overcharge small businesses for sending money abroad, for example. A total of 2.43% of the value of international payments is being charged by UK banks, amounting to a staggering £3.96bn in transfer costs.
7. Data breaches
While the majority of victims of serious cyber attacks are large corporates, SMEs are increasingly a target of cyber criminals too. In fact, between 2014 and 2015, more than 90% of small businesses in the UK experienced a breach of their data, costing companies some £34bn a year. It is virtually impossible to protect your business against every form of cyber attack, but there are some measures you can take to reduce the risk. Educate your staff on phishing scams, for example, and get them to report incidents to whoever oversees your IT. There is also a government-backed scheme that you can sign up to. Known as Cyber Essentials, it is designed to protect you against some of the most common online threats, including viruses, malware and hacking.