Companies urged to adapt their business models or die

Well over a third of UK small and medium-sized enterprises (SMEs) believe that if they don’t adapt their business models they will go out of business in five years, but only 2 per cent have done something about it.

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These are the findings of the 2016 ‘SME Barometer Research’ commissioned by Exact, an annual survey looking at technology adoption and business models among 2,500 SMEs across Europe and the USA.

One of the key highlights of the research was that two thirds (64 per cent) of all UK SMEs face competition from new digital players in their space. Yet, surprisingly, only 6 per cent are investing in new technology to keep up with this digitalisation movement and retain market share.

The findings come at a time when SMEs across all seven countries surveyed (UK, Germany, France, Belgium, Spain, the Netherlands and the USA) are planning for growth; 73 per cent of UK SMEs have said they are planning to grow.

Gavin Fell, general manager of Exact Cloud Solutions UK says, ‘It’s great to see that there’s such a positive outlook among SMEs, but it’s clear that in order to deliver on those ambitions businesses need to adapt to the times. Digitalisation is going to be key to ensuring you are not only efficient, but remain competitive in today’s highly challenging environment.’

The research reveals that while only 2 per cent of British SME leaders have already taken action to align their businesses with market developments, a further 56 per cent are now exploring new business models, something that is shared with their European and USA counterparts.

New business models; new technology

Some of the primary focus areas are investing in new technologies and talent. In the UK, SMEs are looking to online sales (30 per cent), partnerships and channel sales (26 per cent) and hiring talent (27 per cent) to boost their businesses. The USA is placing greatest faith in online sales (39 per cent) while Germany is throwing its weight behind new partnership agreements (31 per cent).

In terms of tech adoption, the momentum behind embracing cloud technologies appears to be gathering pace in the UK with 58 per cent now using one or more cloud tools, up from 47 per cent in the same survey last year. This remains a priority from last year’s study (63 per cent) with 65 per cent believing that technological changes are going to have a strong impact on the competitive landscape in the UK in the next three years.

Other tools that are proving popular among SMEs include data analytics and reporting.

More than a third (34 per cent) of professionals surveyed say they could get a complete overview of company performance with a single push of a button.

This increased availability of information is driving profit growth, with data-led businesses reporting an average profit margin of 21 per cent last financial year, in comparison to 9 per cent for businesses reporting limited use of data.

Erik van der Meijden, CEO of Exact says the use of technology to deepen business insight means that the wider SME economy is entering a new period of rapid growth and efficiency.

‘As customer demands become ever more stringent, we are seeing entrepreneurial businesses taking advantage of digitalisation to broaden their service offerings,’ he adds.

Further reading on business models

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