4 Ways Small Businesses Can Stay Ahead of Competition During Economic Uncertainty
How can SMEs stay ahead of the competition?
Small and medium-sized businesses struggle regardless of the economic outlook within an economy; however, the support available to them might be dependent on the condition of the economy. In the current economic atmosphere, it is important how you prepare your business for economic uncertainty. SMEs in the United Kingdom are currently known to be operating in what experts refer to as the “most uncertain times” of recent history. According to a study conducted by American Express and Oxford Economics in 2019 about 64% of the UK-based SMEs are concerned about the law, policy and regulatory changes which will eventually have an impact on their business operations. The Government is trying to address these issues by constantly introducing new reforms to help SMEs sustain themselves.
Related: Learn about the changes happening right now due to the uncertain situation – visit our coronavirus support hub to stay updated with the latest updates that could help sustain your business in times of economic uncertainty.
In the current dynamics, as a small business in the UK, it might become hard to survive as a small business. So what is the ideal way forward for SMEs to achieve success and sustainability to stay ahead of their competition, all the while safeguarding their operations in the course of geopolitical and economic stress? During stressful economic times, SMEs find it hard to manage cash flow, retain staff and invest in growth as they lack the resources available to bigger, more successful businesses. Our guide to funding can be a good starting point for new businesses looking to acquire funding to grow, expand or manage working capital.
Start-ups, SMEs and entrepreneurs struggle to accomplish the “bare minimum”. It is even more challenging to stay ahead of the bigger, more established competition. Small businesses are meant to have a more creative approach. The kind that allows them to dominate their competitors to grow in the industry. The creative ideas we have seen businesses to prepare their business for economic uncertainty are what we will be addressing in this article today.
Related: If you are thinking about starting a business, our startup guide can be a valuable resource.
Prepare Your Business for Economic Uncertainty
Fine-tune your Business Plan
All great businesses are a product of extensive planning followed by the successful execution of those ideas. In a time of economic-financial crisis, SMEs are required to fine-tune their business plans in order to work out the best possible strategy that could help them sustain themselves during uncertain times. Reviewing a business plan in detail could be a good starting point, to decide what parts of the plan have become obsolete. This information can be used to perform a cost-cutting exercise to reduce operational costs, as this is one of the most common ways that SMEs can combat economic and financial stress.
There are many other ways fine-tuning a business plan can be useful. Things such as pivoting the business to offer something that consumers want to buy during tough times instead of the main product can help small businesses to stay in the competition. Apart from cutting costs or changing business models, businesses can use the process of reviewing a business plan to make strategic investments as well as smart management decisions to help face challenging times.
During economic uncertainty, it can be a wise decision to find a suitable time Accounting Firm as a partner to help with things such as claiming reliefs, managing cash flow and improving performance. Use our expert guide to view various methods that can help you grow your business.
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If you want to know how to grow your small business, we’ve highlighted 10 amazing Tips to Grow a Successful Small Business which will increase your business productivity. Watch now!
Stay ahead of technological trends
Every year new technological trends are introduced into the market. The year 2020 has seen some massive advancements in the technological sector. Rapidly changing technology is one of the major concerns that SMEs need to contend with. This scenario became apparent in the study conducted by American Express – the results concluded that around 65% of UK SMEs can unlock their business potential by incorporating new technological trends.
Furthermore, the study also revealed that the UK SMEs are gradually changing their focus from infrastructure to value-added technology, all the way to ranking workforce productivity tools that are regarded as a priority today and will be paramount in the future. The new improvements are followed by faster and more reliable communication systems, increased employee monitoring, faster task completion through automation and access to more meaningful data through the use of AI. Learn how AI can help you extract maximum value for your business? Unfortunately, less than 50% of UK SMEs are integrating new technology in their businesses in comparison to their immediate competitors.
SMEs that are better at the use of new technology will have a greater advantage when future-proofing their business. The following technological tools and software have become a necessity to stay ahead in tough business times.
- Automation – the game-changer: Growing number of businesses around the world are moving towards automating their business operations which include accounting and finance as well. Automation brings with it several business advantages, improved efficiency and prepares your business for economic uncertainty. For instance, a company that uses automated accounting software will most likely organize their financial data in a better way which will lead to better decision making. Moreover, these softwares have given employees the freedom to work on innovative ideas rather than on tedious and monotonous tasks.
Related: Learn how cloud accounting apps enhance business performance? Read more here.
- Next-generation technologies: It is extremely important for SMEs and start-ups to operate using next-generation tools such as chatbots, AI, blockchain, to name a few. Moreover, social media platforms continue to provide a marketing platform for businesses of all sizes in the year 2020. If used strategically – digital marketing could be a game-changer for your company’s success.
Speaking to Startup Accountants who have worked with hundreds of businesses can be a good starting point to help you assess your investment in technology and if it’s sufficient when benchmarked with similar businesses in the same industry.
Streamline payments to improve efficiency
Streamlining payments can help SMEs acquire greater control over their cash flow. Research has revealed that 68% of the UK SMEs are of the opinion that the flow of cash plays a crucial role in operating their business, although about 30% of SMEs experience difficulties in accessing the finance they need to run their businesses.
Unfortunately, the majority of SMEs depend solely on the old-fashioned payment systems as well as single funding sources which lead to delayed payments. As a result, SMEs find themselves with increased uncertainty in relation to the payments of their sales invoices. Thereby they cannot maintain an accurate cash flow forecast. If you are struggling with getting paid on time as a small business, read here to learn 5 tips that can help you get paid on time.
Access to constant cash flow can safeguard a business against hardships. It can also help companies to remain nimble and flexible when it comes to responding to growth opportunities. In fact, this is a great advantage as far as expansion is concerned as well. In addition, moving away from the traditional forms of payment (such as paper payments) can save time, improve efficiency and reduce the risks of common human errors.
Related: Are you struggling to find a suitable bank for your business needs? Learn about the best business banks in 2020 – read here.
How to streamline payments?
Currently, there are a number of payment solutions that are meant to make the payments process more effective and easier for customers. All these solutions are there to encourage efficient payments. While enabling businesses to have their hands on most of their cash for a longer period of time in order to pay their suppliers in a timely manner. For example, supply chain financing indicates that as long as the invoice is approved. The supplier can be paid by a third party directly in accordance with the buyers’ instructions. In this case, the buyer can hold onto its capital until a single consolidated invoice is received from the third party towards the end of the supply chain finance billing cycle.
Other solutions can help in the reduction of billing errors by simply assigning a single-use account-number to every transaction. This means when the suppliers charge the virtual account number. The charges are verified immediately against the currency amount as well as the date range set aside by the buyers. This is done to ensure that each transaction data is aligned to reduce the risks of misunderstandings or rather tension between the buyers and suppliers in a bid to make it easier for invoice reconciliation. However, the greater control and the additional visibility over-spend that is offered by this type of process is normally valuable at the time of great uncertainty. Especially where the planning cycles are compressed.
Related: If you are confused about the pricing strategy that you need to implement on your small business, read our guide to find out about 10 different pricing strategies that you could use.
Consider foreign business ventures
It can be intimidating when it comes to the process of exporting abroad. Especially to those approaching it for the first time. This observation was openly reflected in a study. Where it was discovered that 64% of the UK SMEs think that it is harder to access new export markets now than it was 3 years ago. Only 16% of the UK SMEs admit that their supply chains have increasingly become international as compared to the previous 3 years.
The beneficial aspects of exporting are likely to become transformative for SMEs. With the right preparations, however, the risks can be significantly minimized. Most of the time, the most important step to take is to do some research. This is where SMEs need to take their time in analysing which type of products can be exported in relation to where the demand lies. The best way to go about this is by conducting research. This will help them find those markets, where their immediate UK based competitors have emerged successful and then travel there to assess the situation in person.
After making the decision, the next step should involve the building of informed, data-led strategies that can be applied to contend with the policies, regulations, customers and social or cultural hurdles like the language barrier. Luckily, there are several organizations that can assist by equipping SMEs with the relevant information regarding all these hurdles. A better example is the Department of International Trade which acts as a rich source of information about international trade and markets online.
In the next stage, SMEs should consider what their best route to markets will look like. The most effective way for SMEs to succeed is to carry out the exploration of the exporting markets through trial sales of specific products. To achieve this goal, a strong and well-established digital presence will be an essential tool. In case selling online doesn’t become viable, then SMEs can consider using local agents, distributors, licensing or franchising their goods overseas.
Speak to your accountant or business adviser, for them to point you in the right direction. If you do not have one, try looking for an Accountant in London or an accounting firm in your region. Moreover, if you are comfortable with the technology you could also go for online accountants.
Through the inspirations highlighted in these four steps, you can prepare your business for economic uncertainty. SMEs can ensure that they are fully protected and also set up for their future success in the face of political or economic changes.
Clear House Accountants are value-driven Accountants in London who help businesses add value by utilizing smart and effective solutions, to make sure their business is prepared for all economic situations.