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Five key trends for small business success in the year ahead

The last two years have been an exercise in uncertainty as the global pandemic has transformed how we work, interact and how we buy goods and services. Perhaps no sector has been more under pressure than small business.

In a 2021 Visa survey, more than half (54 per cent) of global small and microbusinesses (SMBs) reported that the last year has been a challenge for their business – and that they’re still recovering.

But as the pandemic wears on, trends are emerging as behaviours begin to stick. That is certainly true for consumer behaviour, and we’ve seen that small businesses that embraced digital commerce have weathered the pandemic better. It’s no longer just about pivoting and surviving – there’s a hopeful surge in entrepreneurship, with a new breed of business owner coming online as digitally-native for the first time.

As the network working for everyone, Visa has made a multi-year commitment to digitally enable 50 million small businesses worldwide. We know that with the right tools, small businesses can confidently meet new customer expectations.

So how can these companies get an edge in a year ahead? Following are five of the important trends that will have an impact on the world of small and medium sized businesses in 2022.

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Now more than ever, experience will be key

Covid-19 fundamentally changed retail – redefining the boundaries between online and in-store shopping and opening up a world of omnichannel commerce. Considering that the average UK consumer is connected to over nine devices and almost five social platforms, SMBs need to rise to the challenge of engaging customers across all platforms.

The small businesses that come out on top in 2022 will be the ones that prioritise experience. Small businesses can no longer afford to think about consumers in unique buckets: people who shop online, people who shop in-store, people who shop in an app. The truth is that customers exist across all of these channels, so businesses need to be prepared to offer a fluid, omnichannel payments experience – one that is engaging, one that is safe and one that is simple.

Sustainability and social impact aren’t just for global brands anymore

The pandemic was predicted to slow the momentum behind environmental consciousness among consumers, but the opposite is happening. Deloitte has found that one in three UK consumers plan to purchase from brands with strong sustainable (34 per cent) and ethical (30 per cent) credentials going forward.

Gen Z and millennials in particular will continue to gravitate toward artisanal goods that are ethically and sustainably sourced, as well as sustainably produced food and beverages. In many ways, small businesses are ideally suited to cater to the needs of socially conscious young consumers, particularly as the pandemic persists globally. A Shopify study found that 68 per cent of consumers in the UK believe that shopping locally is important and 51 per cent of consumers expect to shop locally more often post-pandemic than they did before. So, while being a small business can inherently help, in order to really win, small businesses should also consider their impact on society – and be sure to communicate it with customers.

Seamless payments will be central to an exceptional customer experience

Customers are increasingly paying attention to the speed, security and convenience of the payment experience in a world where transactions are shifting from cash to cards to digital devices, and customers expect every interaction with a brand to be effortless.

A recent study found that an average of 68 per cent of people abandoned an online shopping basket due to difficulties completing the purchase, with many citing a complicated or long checkout process, so they didn’t make the purchase at all or bought the item somewhere else.

Meanwhile, in stores, contactless payments are the norm in most parts of the world. During the pandemic, many British people chose to tap to pay for the first time and instantly recognised that it’s also faster, easier and more secure. In 2020, the number of contactless payments made in the UK increased by 12 per cent to 9.6bn payments, accounting for over a quarter (27 per cent) of all UK payments with recent Visa data showing that over eight in ten (82 per cent) in-person payments are now contactless. With the contactless limit being raised to £100 in October 2021 to meet this growing demand, we’re seeing contactless payments continue to thrive, thanks in many ways to the small and mid-size businesses that are quickly adopting the technology to keep up with their customers’ expectations.

Payments isn’t just about completing a sale. The checkout experience should be – and is – a reflection of your brand. It’s also the last opportunity for small business owners to make a great impression on customers as they walk out the door (or leave your site). SMBs have to make it as frictionless as possible for customers.

Small businesses will cross borders

According to The World Bank, small and medium-sized businesses (SMBs) represent approximately 90 per cent of businesses (rising to 99.9 per cent in the UK) and more than 50 per cent of employment worldwide. Thanks to the digital adoption of the past two years and evolving technology, small businesses have a unique opportunity to bring products and services to customers around the globe.

It used to be that only big businesses could scale in a way that allowed them to access customers in other countries, but payment technology can easily enable customers to pay with local payment methods and currencies – businesses just need to be savvy enough to market themselves in a way that is enticing to different “local” audiences around the world. It is also important to keep on top of commercial and regulatory barriers, so finding a partner that supports cross-border expansion is key.

Small businesses will see more benefits from AI and machine learning

Much has been made of the ways in which artificial intelligence (AI), machine learning and deep learning are transforming large business processes from credit decisioning to inventory management. As software and hardware costs decrease, more solutions for small businesses that leverage AI and machine learning will become available. Why does that matter? Services powered by AI and ML can mean more efficiencies, more protections and ultimately more profit for the bottom line.

In many ways AI is already being adopted by small businesses behind the scenes. Organisations like Visa use AI and deep learning to make real-time authorisation decisions for small business transactions while financial services companies use the technology to offer customer instalment loans. Many tech companies that provide a service to SMBs are doing the same. Businesses should ensure their suppliers are investing in these important technologies and passing the benefits of their expertise on.

In a year that will be defined by new expectations and new experiences, the good news is that technology is opening new opportunities for businesses of any size to participate in the global digital economy.

Source: Small Business

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2.1 million UK SMEs are ‘just getting into balance’

UK SMEs are ambitious for the opportunity to regain lost ground after the pandemic, but risk being held back by a myriad of rising pressures, including rising costs and cash flow challenges.
According to Bibby Financial Services’ (BFS) annual SME Confidence Tracker survey, this difficult operating environment causes friction and fragility among smaller businesses.

Examining the views of 500 UK SME owners and decision-makers, it finds that 82% of SMEs now feel confident about their prospects this year, an increase of six percentage points over 2021, and over the last six months has 56% of companies reported an increase in sales.

But the report warns that although SMEs have duly earned their resilient reputation, this optimism is set against the backdrop of continued uncertainty. Research shows that profitability is on a knife-edge, with four out of ten now describing themselves as ‘just about going into balance’, equivalent to 2.1 million SMEs and only half describing themselves as profitable.

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Derek Ryan, CEO of Bibby Financial Services in the UK, said: “UK companies are facing a heady cocktail of problems that threaten to impact growth forecasts for 2022 and beyond, including rising inflation, skills shortages and a cost-of-living crisis that not seen on such a scale in the 21st century.Although our report highlights a stoic resilience among the UK SME community, many are still struggling to keep their heads above water and work on a daily basis instead of looking ahead to growth. “

The report highlights key concerns for SMEs, with companies ranking inflation, conflicts in Europe and supply chain disruptions as key concerns in addition to the persistent challenges posed by COVID-19.

Concerns vary from industry to industry, where SMEs in the manufacturing sector are most concerned about inflation, the rising cost of raw materials – such as steel – and staffing costs. The construction and wholesale sector SMEs are mostly preoccupied with conflicts in Europe. While the biggest concerns for carriers include cash flow, Brexit and staff shortages, as well as the shortage of truck drivers and the impact of bureaucracy on cross-border trade.

Overall, more than a quarter of companies highlighted cash flow as a concern. Nearly one in five said they need cash flow support more now than before the pandemic, and 9% said they do not even have the cash flow they need to operate on a daily basis.

When the cash flow is so crucial to the company’s survival, late or failed payments can be fatal to this new strain of ‘Just About Breaking Evens’. More than a quarter (28%) – equivalent to 1.5 million companies – say they have suffered bad debts in the previous 12 months, with amounts being written off due to customers’ non-payment or long-term default. This is significantly higher than in 2021, where 20% reported bad debt, and the report finds that SMEs have written off an average of £ 10,329 in the last year alone.

Ryan continued: “SMEs faced the pandemic with courage and now they must continue to adapt and change in order to carefully deal with the rising costs of doing business. It is clear that cash flow challenges and payment problems continue to plague companies, and it is now more important than ever that they have access to working capital to support day-to-day operations and to repay debts raised at the height of the pandemic. But they can not succeed alone; the private and public sectors, and we urge policy makers to look closely at broader tax cuts and energy subsidies to help SMEs and to ensure that they continue to play a key role in the UK’s economic recovery. “

Source: News Dubai

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Nearly two thirds of SMEs find digitalisation useful for revenue growth

New research from IONOS, one of Europe’s largest cloud and hosting services providers, has found that just under two-thirds (63%) of SMEs find digitalisation useful for revenue growth, and nearly three-quarters (70%) of those asked find it useful for winning new customers.

IONOS conducted the research to understand where digitalisation is tracking in terms of businesses priorities and what aspects SMEs find important for driving their business forward, as well as key challenges. The research, conducted by YouGov on behalf of IONOS, polled a total of 1,002 UK SMEs.

The research also explores how UK SMEs compare to their European counterparts, with over 3,000 individuals in France, Spain and Germany polled.

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Interestingly, the results show that UK SMEs feel less impacted by barriers to digitalisation, compared to their European counterparts. Respondents in all countries rate costs and lack of time as the major barriers to digitalisation for their companies, however the UK came out lowest for both of these with four in 10 stating both time (42%) and costs (40%) as key issues.

UK businesses also feel more knowledgable overall about digitalisation, with only 29% saying this is a barrier, compared to over half (51%) of those asked in Spain.

The UK is the frontrunner in digitalisation implementation when compared to the other countries polled, with almost 80% of UK SMEs surveyed having a website, 76% using an email with their own domain and 64% using social media to further their business needs. France came out much lower, with just over half of those asked having a website (52%), and under half (47%) using social media.

Following the pandemic, digitalisation continues to be central for SME business models, with three quarters (76%) stating it as important to the future viability of the business.

Given the increase in cyber attacks experienced since the pandemic, and the tightening of data compliance, it’s unsurprising to see that – besides being visible on the internet (46%) – IT security and data protection are two of the top areas of focus for SMEs implementing digital measures (42%), followed by collaboration with employees, partners and customers (39%) and digitalisation of the complete business model (28%), showing a shift to a more digital-focused approach.

The second-year IONOS has conducted research into SME digitalisation, one area of growth in the UK highlighted is the increase in SMEs offering products via an online shop, with this jumping from 22% in 2021 to 33% in 2022.

“Many small and medium-sized businesses have finally realised that digitalisation secures their future viability,” says Achim Weiß, CEO of IONOS. “However, the results of the YouGov survey unfortunately also show that there are still drawbacks in the implementation. When budget and lack of time prevent companies from this essential task, simple, unbureaucratic help and solutions are needed!”

Looking at wider business investment areas for SMEs, nearly seven in ten (68%) rate sustainability and environmental protection for their company as important and over half (53%) stated sustainable suppliers as key – something that will be considered when choosing technology suppliers too.

Exploring the views on sustainability in more detail, 38% found certification and seal of approval for sustainable products or companies as important for sustainability in the company. When exploring obstacles to becoming more sustainable though, financial resources (32%) and knowledge and skills (22%) came out as the top issues.

By James Cook

Source: Business Leader

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Small business sector could be set for a ‘boom’ in 2022

Private equity house IW Capital is reporting that SMEs throughout the UK saw impressive growth throughout 2021 and have continued this momentum into 2022.

The firm detailed that 56.2% of SMEs are reporting a rise in earnings in the last quarter of 2021 versus the same period of 2020.

The small business eco-system (which includes many catering equipment dealers and suppliers in this country) is predicted to be a ‘boom’ sector throughout 2022 for UK business, with UK SMEs looking to drive employment and investment numbers and 58% predicting an increase in revenue this quarter compared to last year.

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After a promising start to the year, 40% of UK small and medium sized businesses are planning to hire, on average, six new employees before the end of March as they look to continue to grow and progress their company, according to IW Capital.

UK investors getting involved in the SME sector could gain tax benefits and a realistic chance to maximise their returns. In 2021 there were a record 319,000 new businesses registered in the UK, with the number of small businesses in the UK now standing at 5.5m. Recent research also showed that two-thirds of the UK workforce want to start their own company, said the private equity house.

With 16% of UK investors looking to back start-ups and newly formed businesses, IW Capital believes they will be given a platform to continue the success and progression of their companies throughout 2022.

Luke Davis, CEO of IW Capital said: “The UK small business sector is in an exciting time. SMEs have worked so hard throughout the last year, not just to survive but to prosper and with restrictions ending the small business sector looks set to revel in the opportunity to grow their businesses significantly throughout 2022.

“SMEs are set to drive employment and investing throughout 2022 – with nearly half of UK SMEs looking to hire new employees after a promising start to 2022 and UK investors ready to back start-ups and newly-formed businesses SMEs are ready to make 2022 an impressive year and grow as much as possible throughout the year.

“The Enterprise Investment Scheme (EIS) could also be an important trend throughout 2022. The EIS can be said to offer a win-win situation for both investors and small businesses – providing SMEs with much-needed investment to provide them with a platform to grow, whilst providing investors with tax reliefs to incentivise this investment. Small businesses and SMEs throughout the UK have benefitted enormously from the EIS in the last 25 years, fuelling growth and job creation at an impressive scale.”

By CLARE NICHOLLS

Source: Catering Insight

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Small businesses thinking big after Covid clobbering

More than two thirds of small businesses expect to grow this year. And re-energised firms are recovering faster – as expansion outstrips rivals in France and Germany. Small and medium-sized businesses are the heartbeat of the economy, representing 61 percent of UK jobs and 52 percent of national income.

Analysis from accounting technology firm Sage shows they are not just surviving but thriving, despite doomsayers’ gloomy predictions about the impact of Brexit and Covid-19.

The removal of pandemic restrictions has left 68 percent forecasting growth this year compared with 57 percent in Germany and 62 percent in France.

And 43 percent of UK firms expect a revenue rise in the next six months compared with 39 percent in France and Germany.

Bosses also expect see an end to import and export problems this year, Half back issues easing, against just 27 percent who fear they will get worse.

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The UK remains the ninth largest manufacturing nation in the world, with annual output of £192billion.

One third of German small and medium-sized enterprises (SMEs) said Covid-related issues were still the biggest threat they faced, compared with just one quarter of British businesses. Analysis by the Manufacturing Growth Programme [MGP] found three quarters of SMEs said supply chain investment would make them more profitable.

Dean Barnes, regional director of the MGP, said: “We need to understand what industry wants and needs to grow.”

COMPANIES worldwide have faced strong headwinds over the last two years. But our research shows British businesses are bouncing back, harder and faster. At Sage, we support thousands of firms leading the fight back.

Enterprising

We’ve witnessed their “can do” attitude and enterprising spirit. Our research shows this has given them the strength to emerge from the pandemic with greater resilience and more confidence.

The UK’s start-up culture is second to none. The number of people who launched a business in the pandemic demonstrates our deep-rooted entrepreneurial spirit. It also shows an ability to look at different ways of working or pivoting into new areas; from the barber who became a coffee seller, to the pop-up restaurants that offered takeaways.

Nowhere was that more evident than in the switch to digital.

Firms that never considered going digital, changed their approach. We’ve made a decade’s progress in just two years and this investment will benefit these companies for years to come.

The confidence of the five million small businesses that are the backbone of our economy is remarkable and our research shows it is not something echoed as loudly across the Continent.

As a nation, we are blessed with a dynamic labour market, which means businesses were able to take advantage of schemes like furlough and Help to Grow.

This gave them the support they needed to navigate difficult times and, as we emerge from Covid, to look to the future positively.

However, we must not mistake small business resilience for invisibility. The road ahead carries new threats in the form of rising costs and inflation rates. This is affecting businesses worldwide.

Our economic recovery depends on the success and survival of British businesses.

Bumpy

The Government can’t afford to overlook their importance. Small and mid-sized firms must be front and centre of decision making.

There is a bumpy road ahead, but our businesses will tackle it with a strong sense of confidence, even more so if they see the Government is by their side.

By GILES SHELDRICK

Source: Express

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Glasgow ranked top UK location for small businesses

Glasgow has emerged as the best city to work in for a small business in Britain, according to new research compiled by small business lender iwoca.

It ranked areas using Office for National Statistics data on average wage, commute, job density, house price and growth of the number of small businesses.

Glasgow topped the list, scoring highly on the shortness of the average commute and the growth of small businesses in the city since 2016.

Glaswegians spend on average 29 minutes commuting between work and home, compared to 50 minutes in Richmond upon Thames.

Between 2016 and 2021, the number of small businesses in the city also increased by 49%. With its burgeoning finance, technology and industrial sectors and plans to build a new Glasgow Metro, iwoca said the city is a natural centre for small business jobs in Scotland.

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Dundee came 7th in the top 25, scoring highly on the growth of small businesses in the city since 2016 – boasting 50% growth – but poorly on average hourly wage and job density, where it ranked outside the top 100 and 25 respectively.

Although a major centre for tourism, Edinburgh lagged behind Glasgow and Dundee on the growth in the number of small businesses, which increased by 32% between 2016 and 2021, ranking outside the top 50 in Britain for this measure.

With its high house prices and long commute times, London did not appear within the Top 25.

RankLocal AuthorityCommuting time (minutes)Average hourly wageJob densitySME Growth 2016 to 2021Average house price
1Glasgow29£19.191.0448.60%£185,595
2Manchester29£19.241.1852.86%£203,250
3Derby23£20.120.9837.28%£175,000
4Liverpool29£17.900.8947.65%£145,877
5Newcastle upon Tyne30£18.431.0245.72%£175,000
6Dundee22£17.670.8549.61%£165,600
7Crawley23£20.481.4248.12%£310,000
8Southampton26£19.910.7762.78%£226,000
9Warrington25£18.631.1842.29%£212,000
10Salford28£17.740.8962.47%£190,000

Francesca Cingano, owner of Glasgow-based Italian catering business Cateritaly, said: “Moving from Italy to Glasgow in 2014 to set up an Italian catering business was the best decision I have made.

“Strangers have gone out of their way to help us solve business problems, commuting around the city is super easy and the council have been incredibly helpful assisting us with health and safety measures, and hiring new apprentices.

“In this environment, we are excited to continue to grow, scale and hire over the coming years.”

Christoph Rieche, iwoca’s co-founder and chief executive, said: “The pandemic has fundamentally changed the life choices we make – it has changed the way we work, where we want to be based and has made many people across the country consider if their current career or company they work for is the right one for them.

“The big corporations grab the headlines and have the profile, but it’s the small businesses who are making this country tick.

“It’s really fantastic to see Glasgow featured as the top spot for SME jobs.”

By Peter A Walker

Source: Insider

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How small businesses are coping after two years of lockdowns

With Plan B measures easing this week, Britain’s small businesses are beginning to look forward, cautiously, to running in a more ‘normal’ fashion.

However, the landscape for these companies — which make up over 99% of UK businesses — has changed unimaginably in the two years since Covid first hit our shores.

The long months of closures, restrictions and constantly changing guidance have taken their toll on SMEs in every sector.

One study from business insurer SimplyBusiness suggests that, on average, small businesses have lost over £20,000 each due to the virus.

Now business owners are concerned about an impending rise in National Insurance, spiralling inflation and the tapering-off of the final coronavirus support schemes.

But despite storm clouds on the horizon, Mike Cherry, Federation of Small Businesses national chairman, says there is optimism in the sector, with more than half of small firms planning growth this year.

‘After two years of turmoil, in which firms have once again shown their adaptability and resilience, the small business community stands ready to spur our economic recovery.

The majority intend to grow over the coming 12 months, and many are looking to increase headcounts,’ he says.

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How small businesses have been affected

The latest government statistics make for sobering reading. The number of private businesses in the UK had been steadily rising until coronavirus came along, then shrank 6.5% in the calendar year 2020 to 2021.

‘One-man band’ businesses are the most likely to have closed, while large businesses only declined by 1%. While there are no more up-to-date statistics on this measure, there is evidence that the situation has worsened since.

The number of businesses removed from the government register was up 24% on the average in the first three quarters of 2021, suggesting a further wave of closures.

The cost has also been huge for those small businesses that have survived. Bank of England figures show that SMEs are now 25% more indebted than they were before the pandemic, because they have borrowed in order to survive. The Bank warned that these debt-laden businesses are vulnerable and that there will be more insolvencies ahead.

The wellbeing of entrepreneurs and small business owners has been badly affected. Alan Thomas, UK CEO at insurer Simply Business, says that over 60% of small business owners have been impacted by financial worries due to the pandemic, with one in five saying that the pandemic has left them in a ‘bad place’ in terms of their mental health.

‘Small business owners have encountered countless challenges during the course of the pandemic,’ Thomas says. ‘Livelihoods are on the line, and understandably this has had a huge impact on people’s wellbeing, with a staggering 82% last year reporting poor mental health.

‘Entering 2022, it’s clear that many of these challenges remain, from staff shortages to supply chain issues. This worrying situation should concern us all, because small businesses are crucial to our economy and communities, and will be central to our collective recovery.’

Not all small businesses have been affected equally by the pandemic. Figures show that certain sectors and certain areas of the UK have found it particularly difficult.

Looking to the future

There is evidence that the small business sector may thrive again. More encouraging government statistics suggest more than 1,800 companies are being set up every day, with London and the South-East the most popular places to start a business, and the North-West the next most popular region.

The latest Federation of Small Businesses (FSB) survey shows that nearly one in six SMEs increased its number of employees in the quarter to December last year, with 17% hoping to do the same this quarter.

Some sectors, of course, are firing on all cylinders. The technology sector counted 2021 its best year ever, with start-up and scale-up businesses raising a record £29.4billion.

According to the FSB, small businesses in the construction industry and the information and communication sector are feeling confident about the future.

At the other end of the scale, though, retailers, accommodation providers and small businesses in the manufacturing industry are far less confident about what 2022 will bring, pushing the overall score for SME confidence down to a one-year low.

Kay Daniel Neufeld, head of forecasting and thought leadership at the Centre for Economics and Business Research, says Omicron had a ‘chilling effect’ on business confidence in the retail and leisure sectors, while manufacturers remain concerned about supply chain issues and inflation, which has pushed up costs.

‘The share of small businesses reporting that operating costs have increased rose to a decade high of 72.9% in Q4 2021, with greater expenses for inputs, fuel, utility and labour being the main causes,’ says Neufeld.

So, while some businesses are rejoicing in a return to normality or even growing from shoots put down during lockdown, many are still battered by the experience of the last two years, and fighting on all fronts to survive.

The onus may be on the government to ensure the SME sector continues to grow, with Cherry, at the FSB, asking in particular for more funding so that companies can deal with the issues ahead.

‘Come April, they’ll be faced with a jobs tax hike, an increase in dividend taxation and fresh business rates bills,’ he says of his members.

‘We need the government to start looking closely at the policies that will empower the small business community to spur our recovery from this recession, as it did the last. The growth intentions are there, but we need the right support to turn vision into reality.’

By Rosie Murray-West

Source: Metro

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Two-thirds of small business owners ‘get sleepless nights over valuations’

Two-thirds of UK small business owners say they get sleepless nights over company valuations, according to new research.

The latest MarketInvoice Business Insights survey found that 66% of SME business owners said their biggest priority is increasing their company valuations.

Despite the focus on driving value growth, only 30% of businesses increased their valuations by more than 10% in the past 12 months, the survey revealed.

The average small business in the UK is valued at £2.9 million, bringing the total value of all UK SMEs to around £3 trillion.

Firms in the education sector have the largest average value, at £4m, and business owners in the sector are particularly concerned about value, with 81% in the sector describing it as a priority.

Business owners said that premises, the products, and people are the key things which bring value to a company.

Despite highlighting the importance of increasing company valuations, business owners said that they saw finding appropriate financing as a major hurdle.

Business owners said they are reluctant to cede control to Dragon’s Den-style equity or venture capital investors, with only 6% saying they have used this funding to drive growth.

More than a quarter, 26%, said they favoured invoice finance, while 22% of business owners said they use asset-based finance.

Anil Stocker, co-founder and chief executive officer of MarketInvoice, said: “Business owners seem to be driven by company valuation but acknowledge how the right kind of finance can really help drive that number.

“It is imperative that they stay focused on their product or service offering and ensure the fundamentals are right first.

“UK SMEs are thinking big, which is great for our economy, employment and global positioning.

“There are some huge macro and political changes taking place with Brexit and the US-China trade challenges but it’s great to see entrepreneurs seeing the growth opportunities around these events.”

By Henry Saker-Clark

Source: Yahoo Finance UK

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Small businesses get no-deal Brexit survival guide amid fears firms are not ready

Small businesses have been issued with guidance on how to prepare for Brexit amid increasing fears SMEs are not ready for a no-deal.

UK Finance – the trade body for the UK’s banking and financial services sector – has urged businesses to speak to their banks about extra finance as soon as possible and consider the impact of potential changes to trade arrangements.

It said the industry had the capacity to support businesses “whatever the outcome.”

Firms have also been told to capitalise on the opportunities of Brexit to maximise growth in an online guide published this morning.

Earlier this month Bank of England governor Mark Carney warned that half of UK businesses were not ready for a no-deal Brexit, according to it various recent surveys.

As uncertainty around Brexit looks certain to go down to the wire, UK Finance has issued guidance for SMEs on how to prepare for Britain’s departure from the EU.

The campaign has also been backed by the Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC) and the Confederation of British Industry (CBI).

“The banking and finance industry has the capacity to support viable businesses whatever the outcome,” UK Finance chief executive Stephen Jones said.

“Any business customers who may have additional financing requirements should begin engaging with their provider now, as the earlier they do so the easier it will be,” he added.

The online guide lists sector specific information hubs to help firms develop contingency plans and provides details on how each bank has committed to help firms around Brexit uncertainty.

Businesses that don’t export or import directly have also been urged to check with customers and suppliers to pre-empt any changes.

FSB chairman Mike Cherry said: “With less than 40 days to go until the UK leaves the EU on 29 March, it’s important for small businesses to prepare for the pressures that may well affect them, especially if we end up with a no-deal Brexit on that date.

He added: “As part of that preparation, we recommend that small business owners and the self-employed talk to their banks or other finance providers as they may well need help to extend overdrafts, seek extra finance or secure extra flexibility for repayment plans.”

Source: City AM

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Will Brexit be good or bad for Britain’s small firms?

It’s always been tough for small and medium sized British firms to find enough money to enable them to grow into world-beaters. But since 1994, the Enterprise Investment Scheme has given generous tax incentives to investors to encourage them to put money into small unlisted companies, either directly or through a fund. This scheme has been very successful in helping the UK’s technology sector.

To see how Brexit might affect it, and small companies in general, we’ve turned to Mark Brownridge, director-general of the Enterprise Investment Scheme Association, the trade body for member firms.

The evidence for Brexit’s impact on small firms paints “a confusing picture” admits Brownridge. On the one hand “the majority of SMEs are by their nature small and growing and don’t have significant import and export supply chains”, which suggests that “leaving the EU isn’t a major concern”. Most firms are taking the view that “without clarity in terms of a trade deal, the best option is to keep calm and carry on”.

Still, it’s undeniable that smaller companies will feel the pain from any economic slowdown: research by the British Business Bank suggests that only 5% of SMEs expect that they will benefit as a result of Brexit.

There are obvious concerns about the labour market

One major area of concern is how Brexit will affect the labour market, both in terms of EU workers already in the UK and of future migration. Brownridge points to research by Deloitte that suggested that “as many as 47% of skilled EU workers in Britain could leave the country as a result of the fallout from Brexit”. Even if large numbers of people don’t leave, SMEs are particularly worried about “the lack of skilled labour coming in from the EU to provide them with the technical skills and workforce they require to drive their business forward as there is a lack of technically skilled people in the UK”.

This shortage of skilled workers is a big problem for all British companies. Brownridge points to a study carried out by the Open University, which found that “nine in ten companies had struggled to hire workers with the required skills in the past”. So it’s not surprising that Brownridge would like to seem an immigration policy that is as close to free movement of travel across borders as possible. At the very least, the government “could do more to address the situation”.

At the moment the UK is one of the world’s major technology hubs, “with around a fifth of technology leaders naming the UK as the most promising global market for technology breakthroughs, behind only US and China. London’s “vibrant tech scene” attracted $3.4bn in venture capital investment – four times as much as Paris, the next largest European city. But there is little room for complacency, says Brownridge, as “there is no doubt that a number of major European cities are jockeying for position as the finance capital of Europe, and London has a fight on his hands”.

But it’s not all doom and gloom

Still, it’s not all doom and gloom, as there are some clear benefits to Brexit. After all, “many of the negative aspects of the EIS scheme are actually imposed by EU state aid rules”. For example, at the moment, “companies are having to delay much needed fundraising” thanks to “rule changes included in the 2015 and 2016 Finance Acts, most of which were intended to secure EU state aid approval”. Once Britain leaves the EU, we will be able to “take back control of the state aid rulebook and rationalise rules relating to granting of EIS relief to small firms”.

But even in this case, it is unfair to put the blame solely on Brussels, says Brownridge: “There is scope to reduce the uncertainty and complexity within the current EU state aid framework if HMRC were to adopt a more pragmatic approach to its interpretation of the existing legislation”, says Brownridge. HMRC “must be given the resources it needs to process applications more quickly”.

All in all, Brownridge remains optimistic as “the government seems keen to build an entrepreneurial spirit and make the UK a hub for small businesses and we certainly believe that EIS and SEIS can play a significant part in creating that environment”. While “funding has been an issue for SMEs for a number of years now” the evidence suggests that “that cash has flown in from abroad over the past year”.

Source: Money Week