Member Article

Future-proof your small business by adapting to these key trends

Businesses have faced huge challenges and undergone a vast amount of change over the past few years, and this trend is unlikely to slow down. As businesses continue to operate in this tough economic climate, the ability to anticipate and respond to challenges and opportunities has never been so important.

It’s essential that SMEs are equipped with the relevant knowledge to face what’s ahead, stay resilient and find ways to thrive in the current UK economy. From my perspective, there are some key trends that small business owners need to take an active role in progressing.

1. Taking control of cashflow

Strong cashflow will continue to be key in creating cost advantage, helping SME’s capitalise on potential opportunities, and keeping their business afloat. In another year of rapid change, businesses will need to ensure they have the right safeguards in place and are keeping on top of their finances to protect cashflow.

In the current climate, it’s imperative for SMEs to know how their business tracks at all times, understanding both their income and expenditure, whilst also maximising their working capital.

Ensuring payments are made on time will demonstrate to prospective lenders that their company is a responsible organisation to conduct business with. While late or non-payments could damage company finances, having the adverse effect on an organisation’s financial health.

2. Improving your business credit score

A business credit score can be used in two ways. As well as being a tool to help you secure the best investment opportunities for your small business, it’s also essential for managing cash flow.

Although using credit can most definitely hold advantages for SMEs, it’s a sensible decision to not to use the full amount of credit available and pay more than the minimum amount required on credit cards. This not only proves that the company isn’t solely reliant on credit, but it also helps to boost the company credit score and help to secure the best lending.

Before entering into long term contracts with new suppliers or clients, running a business credit check to get an insight into their business credit score could show you any hidden red flags and ensure your working relationships doesn’t result in years of chasing up bad debt. It’s likely they’ll run one on you too, so it benefits to keep yours high.

3. Deeper digital transformation

The pandemic has accelerated the digitalisation of SMEs. Sage research found that 8 in 10 SMEs now need digital tools to start, survive and grow their business – across all sectors and parts of the UK. SME owner’s time is precious and new cloud technology can completely change the way they work, through smarter processes and powerful insights.

Adopting new processes such as cloud accounting provides the opportunity to simplify and standardise the way of working - with no more manual processes, or physical documents. It has the ability to make finance processes more efficient.

Technology has the ability can help small businesses navigate a range of challenges and opportunities. From improving customer experience and driving operational efficiencies, to using data for increased sustainability. However, there are a number of barriers to greater tech adoption, including lack of time, expertise, and money to invest.

4. Showcasing sustainability

Recent research shows that over half of SMEs have invested in sustainability this year and plan to do more. It’s fair to say ‘green’ considerations have been in the mainstream for many areas of financial services for a while, as more organisations aim to reduce their impact on the environment. It’s vital that SMEs are keeping up with societal change and demand.

Businesses should be looking to improve their own impact on the environment whilst looking for green finance options to help fund their business, helping play a positive role towards better sustainability.

Boosting growth with a more sustainable finance option will help SMEs to reach carbon neutral or positive state. It also helps to build greater engagement with both suppliers and consumers who are actively looking for better commitments from the businesses they work with.

By choosing a more sustainable approach to borrowing, businesses are actively moving towards a better, cleaner future whilst helping to improve the environment.

The importance of SME trends

The UK economy is constantly changing and evolving rapidly, therefore it’s vital that businesses are staying up to date with the latest trends. By getting a better understanding of the current climate, SMEs can make better, more informed decisions regarding their strategy and operations going forward.

This was posted in Bdaily's Members' News section by James McGarva .