For SMEs, the disruption and economic impact of the coronavirus pandemic has meant that many UK small businesses have had to face an existential threat with many businesses around the country having to close temporarily.
Small-medium-enterprises, often referred to as SMEs are often referred to as the backbone of the UK economy. Yet while small businesses are essential the UK economy, most are financially fragile, with little cash reserves to buffer even minor financial shock.
With vaccinations for Covid-19 underway, there are reasons to be hopeful as business leaders throughout the UK are focusing on the critical months ahead as they adapt to ‘the new normal’. Many small businesses have been agile in their approach to change, especially in their digital capabilities, to keep themselves viable in a rapidly changing environment.
So why are SMEs so important for the UK economy?
There are an estimated 5.9 million UK private sector businesses and back in 2014, as the economy was recovering from the recession, the then Prime Minister, David Cameron highlighted the importance of small UK businesses:
“One of the great privileges of being a Prime Minister is you get to meet some extraordinary entrepreneurs and small businesses. And over the last few years, I’ve met entrepreneurs – and I’m not making this up – who have sold tea to China, who sold curry to India. I even came across one small business in Anglesey that made canoes and sold them to the Eskimos. So I don’t want anyone with any doubt about the immense enterprise we have in our country.
And small business, are going to be particularly important at this time as we recover from what has been a long and difficult and very deep recession”.
Here, Ian has identified the key reasons why SMEs are essential to the UK economy in 2021:
- Generate Employment Opportunities. According to the FSB, SMEs account for three fifths of UK employment and around half of turnover in the UK private sector, with total employment in SMEs amount to 16.8 million (61% of the total), whilst turnover was estimated at £2.3 trillion (52%).
- SMEs inspire innovation. The capacity for innovation is a critical factor for an SMEs success as well as for improved national performance in today’s global economy. SMEs don’t usually have the financial resources of larger corporations to drive innovation. Yet, SME leaders drive innovation by leveraging all potential growth and competitive advantage.
- Innovation itself is a broad concept that encompasses virtually any new development in organisations. Innovation can involve re-engineering or creating products and services to meet new market demand, introducing new processes to improve productivity, developing or applying new marketing techniques to expand sales opportunities, and incorporating new forms of management systems and techniques to improve operational efficiency. Innovation from SMEs help maintain the UK’s world-leading position in research and innovation and create the best environment for them to flourish.
- SMEs are agile and adapt quickly to change Agile practices help SMEs with handling larger projects and improving the capacity for what the small business can complete. It is essential for any size business to reach project goals within a given time frame, an accurate budget, and a quality end product. Organisational agility gives your business the competitive edge it needs in a digital world. Ultimately, supporting growth and innovation to drive UK economy forward.
- Boost local communities. From locally sourced produce which attract customers to the community and bolstering tourism to generating community involvement and health benefits. They give the community identity with unique character and charm.
- Customers feel more ethical. SME play an integral part in driving growth. In a globalised business environment where big tech companies reign supreme, there’s a consideration to ‘shop local’ to improve ethical morale grounds for customers. Choosing to support local businesses means they’re not only supporting the local economy and the livelihoods of those business owners but also reducing a customer’s carbon footprint in the process.
We host regular business growth programmes to help take your business from good to great. Visit our Events & Seminars timetable and book your free webinar today.
During this time our world-class business coach Ian Harford is also offering a Virtual Coffee for any businesses who would like to gain some support or advice, or you can claim a free coaching session to help you find your way out of lockdown. Book your session here.
“Because being in business should give you more life!” – ActionCOACH, Business Coaching for Real People.