Small businesses are widely considered to be the lifeblood of both the UK and global economy. Whilst a great deal of multinational corporations have suffered in the wake of an international economic downturn over the past 6 or 7 years, leaving many consumers sceptical as to the sustainability of big business, the public has been going back to what it knows: keeping it local.
SETTING THE SCENE
A study by small business financiers CAN Capital has revealed that 58% of US-based SME owners expect growth over the course of the next 12 months. The study looked at many aspects of small business, from financing through to marketing, recruitment and general HR issues. Twenty percent of the businesses surveyed stated that they would be taking on more staff, with a further 20% actively planning to make investments in new operational tools and technologies, for example CRM and HR software such as that offered by companies like Salesforce.
The story is just as optimistic in the UK. One only needs to look to initiatives such as Small Business Saturday to see that the appetite amongst consumers for supporting the so-called little guy is sizeable. Last year, over £460m was spent in small businesses on that one day, with nearly half of all consumers being aware that the event existed. Heading back Stateside, evidence that small businesses fuel economies the world over is backed up by statistics. Over half of businesses experiencing growth last year had fewer than 10 employees and in Q3 of 2013 over 30% of net job growth came in organisations with under 50 members of staff.
GETTING OVER THE HURDLES
However, whilst optimism in the SME world is running high, small firms still feel anxious about their ability to access cash via traditional funding methods such as bank loans, according to a Bank of England report published recently. Overall borrowing through the Government-backed Funding For Lending initiative was down in Q2, with over half of small businesses saying that they found the availability of credit ‘poor’ or ‘very poor’. One only need look at this interactive funding calculator for small businesses to see how much less traditional financing methods offer to organisations. Undeterred by the spreadsheet error mentality, SMEs are instead looking to alternative financing streams, with peer-to-peer lending collectives such as Funding Circle allowing many to gain access to the working capital needed to fund growth and investment.
POWER TO THE PEOPLE
Central to this growth and investment is likely to be a focus on people; that is employing the right people, retaining them and fostering an environment within which they can collaborate and communicate effectively. The mid-sized housing association L&Q has been shortlisted for the Employee Engagement Award, one that recognises the importance of effective employee communication on profit and overall business success. The organisation set up a collaborative learning group to champion employee communication and engagement and to meet twice a year with the CEO. This was supported by a training program, with the learning group rolling out staff suggestion boxes, newsletters, employee blogs and team building events. It is surely these types of initiatives that other small businesses are looking to and being inspired by, something that feeds into the general climate of success in the small business world.
THE FUTURE’S BRIGHT
So whilst the obstacles to growth and development are sizeable, particularly in regards to getting access to finance, there is a refreshing air of defiance and pride that shines through. Small businesses understand the importance of their people in driving that growth, are aware of the various operational tools available to them and are willing to club together in order to achieve the kinds of investment that will be of benefit to all involved.