Small Business EQUALS Big Significance
There are 4.5 million SMEs making up 99% of all enterprises in the UK. London alone accounts for 748,000 of these enterprises, and the surrounding South East a further 745,000.
Source: Department for Innovation and Skills
Speaking as a fellow small business, we argue that considering the above, collectively we are not so small after all!
From a mixed sample of 10,000 UK Small Medium Enterprises, FSB research highlights that '95% of SMEs fail within the 5 first years of trade'. Therefore, with small business playing such a significant part in the UK economy and recovery from recession, it is really important that SMEs are educated and supported in avoiding failure. This prompts the question 'Why do SMEs fail?'. This can be for one or many reasons. Here are several of the most common reasons from research:
- Poor business planning: not just having a plan, but making sure it is relevant to the market demand, and then making time to act on and review the plan.
- Poor marketing: Whilst each business will have its own use for different marketing channels, it is important to recognise the changing trends within your industry. For example, a strong but relevant social media presence can greatly boost your company's brand awareness. Making it easy for your target audience to find you and adapting your company's marketing strategy to accommodate this will maximise interest and ultimately help build your sales pipeline.
- An absence of clear objectives: if you haven't set periodic benchmarks for where you want to get to, then how do you measure the progress of your firm and key people within it?
- Lack of finance: they say the Banks aren't lending, but have you approached the right provider? Have you provided the right credentials and evidence to support your application? Maybe an investor would be an option?
- Poor cash flow management: it is common for businesses to run out of cash in the short term from not planning cash flow forecasting carefully, especially when growing.
- Poor management: as a business owner, do you manage, or do you lead? Maybe both at different times and depending on prevailing circumstances. Furthermore, many businesses do not invest enough time in developing, and listening to their teams.
As a small business owner you may read this and think 'I know the aforementioned as basic fundamentals of running a business'. If you are doing all the above right and your business is optimising growth and profitability, then hats off to you, congratulations!
For the other 95% of readers who started trading in the last 5 years; being better aware of the pitfalls with starting up and enrolling professional advice for the right support will put you in good stead. This could involve your accountant, bank manager, lawyer, investors, or a strategic consultant/business growth mentor.
The experienced team at ABP, which includes 10 strategic consultants, believes that by partnering with you and other SME supporting professionals, we can help small business play an even bigger part in the UK economy. Together we can reverse these failure rates into success rates.
Advantage Business Partnerships Ltd has a range of strategic consulting and business growth mentoring services with no long term commitments which start from £49.95 per month (excluding VAT). For more information contact us through our website www.advantagebusinessltd.com or call 020 33840 276 quoting 'ABPBlog2012' for a no obligation discussion.