It’s abundantly clear that many UK Small to Medium Enterprises (SME’s) are beset with challenges when looking for that growth and business success that we all want. The factors involved in the SME Challenge are many and can be quite complex, however, there are a few really key elements that are clear to me and I would like to share those that I consider critical, and how to (potentially) deal with them. Before I do though, five stats to surprise you as they did me!
- Small Business survival rates in the first year in the UK are as high as 91% (sector dependant) with Finance and Insurance being the lowest at 83% (or 8 out of 10)
- Small business survival rates across the first 5 years, however, are only 40% (4 out of 10 still trading) with Accommodation and Food services being the lowest at 33%
- In 2018 small business accounted for 99.3 of all private sector business in the UK (Yes you did read that correctly and 99.9% of those were classified as SME’s)
- Total employment by SME’s accounted for 16.3 million or 60% of all private sector employment in the UK (That’s around £2.0 Trillion of annual turnover, yes Trillion!)
- The number of overall business in the SME sector fell for the first time since 2000 last year, with an overall reduction of 27,000 businesses (although in contrast employment across the remainder rose by more than 2%)
Clearly some surprising and some bad news in there for the 5.6 million small businesses at the start of 2018, with an overall fall in business numbers during the year. A failure rate of 6 in 10 businesses across the first 5 years and its worth highlighting that the second five years are no better for business success either.
SME’s, of course, are critical for the UK economy to make its way forward, for employment and cashflow (Taxes & VAT) and most importantly for employment and for continuing to encourage the entrepreneurial flair that the UK population have done so well at across the decades. So what are the biggest causes of business difficulty, that if not addressed in time will ultimately lead to business failure?
Here’s my top 5:
- Poor planning for the business direction, for investment, for cashflow, for marketing, for sales pipeline for the team or for personal growth.
- No demand for the product or service being offered, too niche and not recognising this fact early enough to change direction.
- No cash, bad debt, late invoicing, poor service or other issues leading to a lack of ability to chase payments due.
- A poor or ineffective team, hiring Auntie Penelope’s Nephew is very benevolent, but do they (really) have the skills you need to get you to where you want to go (are they on the right bus)?
- The Business Owner remains a technician (and still operates the ‘widget maker’) rather than making business decisions and spending time working ON the business strategy, products, team and other key areas in points 1,2,3 and 4.
If you wanted to learn to fly a plane, you would take lessons from someone who could fly a plane, if you want to learn to ski, you take lessons from a Ski-Instructor, If you want to become a Doctor, you go to University and to Med school! When you want to become a parent, you can go to parenting classes! What do you do if you want to become a Business Owner? Surely you go somewhere to learn how to do that right? No, most business owners are not there because its their vocation, they are there because it seemed like a good idea at the time, they disliked their boss, they always wanted to own a business selling their trade (plumber, plasterer, mechanic or similar) or they partnered with someone else who didn’t know how to run a business so they could do it together.
Now I am not saying that everyone falls into the above category, there are clearly some who are naturals, who have the ability and the desire to learn, they do it fast and they do it well. Or they try it once or twice and fail, but get right back up and do it right the third or fourth time, I have the greatest admiration for all of the above. It is not the norm, however, and this propensity for business ventures to fail, for owners and staff to lose their jobs and the ability to pay their mortgage or feed their family is why the Business Coaching Community exists and it is absolutely why I have the best job in the world, bar none!
So here’s my free tips for 2019, if you don’t have enough customers, you need a lead generation strategy and a marketing plan, if you can’t close those deals fast enough to pay the bills, then consider a sales strategy that works, if you are struggling with time and focus, then consider developing a plan to correct that, if money is the issue, then consider a strategy to raise cash, improve margins, monitor cashflow, and if you cannot see how your business is doing until the end of the year when your accountant shares the years accounts, then consider developing a business dashboard that keeps your finger on the pulse, every day.
Ultimately if you cannot see how you can do any of those whilst still operating the ‘widget maker’ then get yourself an experienced, qualified, Business Coach.
(Stats courtesy of the FSB and the UK Department for Business (.gov))Take the next step, speak to a Coach