Companies get innovative in response to tough times for business

Two thirds of small businesses in the UK have been forced to overhaul how they work in reaction to poor economic conditions, according to a new report.

The study by CitySprint, ‘Collaborate UK’, highlights the new strategies being followed in response to the downturn, revealing a significant cultural shift among the dynamic small and medium-sized enterprise (SME) community and the emergence of a new breed of leaner, more focused businesses.

It finds that a quarter (24 per cent) of the 700 companies surveyed are now more open to working with other businesses than they were before the downturn and 14 per cent now work with more partners as a result.

Around one in eight would even team up with a competitor if there was a business benefit.

The report identifies the emergence of a new breed of ‘size zero’ businesses – organisations that are stripping out non-core functions by embracing outsourcing, exchanging services and sharing expertise, so that they can focus on their strengths.

Some 2.8 million SMEs have embraced outsourcing, buying in a mean of five non-core business functions. Among this group, the projected mean spend on outsourcing in 2013 is £143,000 with 18 per cent planning to increase it, while the biggest spenders can be found in the East of England, where SMEs plan to spend an average (mean) £203,000.

Nearly half a million SMEs are engaging in a ‘bartering’ economy, by trading their services with other businesses in lieu of payment. Wales is leading the way, with 16 per cent of SMEs there saying they have contra deals in place.

More than a quarter (28 per cent) work with other businesses to obtain sales leads and win new business while 22 per cent share best practice with other businesses.

A sizeable 28 per cent of businesses in Yorkshire and Humberside would even consider working with a competitor (compared to the national average of 12 per cent).

These smarter ways of working have perhaps contributed to a feeling of cautious optimism among SMEs as they look to create over 400,000 new jobs this year, with the West Midlands showing the biggest signs of optimism and the North East the lowest (see Table One).

Professor Robert Blackburn, director at the Small Business Research Centre at Kingston University says, ‘This more open, collaborative culture not only strengthens the capabilities, flexibility and efficiency of SMEs but has a wider economic benefit, stimulating more opportunities for enterprises as ‘suppliers.’.

Patrick Gallagher, CEO of CitySprint comments, ‘By sharing expertise, exchanging services and embracing smart outsourcing, SMEs across the country are successfully stripping non-core functions out of their businesses. This is creating a new breed of leaner, “size zero” businesses, able to focus on their core area of expertise whilst tapping into their networks for everything else, as and when they need something.’

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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