The importance of small businesses in the UK economy

Here, we look at the challenges on the path to prosperity for small businesses, including regulation, red tape and access to finance.

Small businesses are the backbone of the UK economy, driving growth, opening new markets and creating jobs therefore their contribution is vital.  As seedbeds for innovation, they encourage competition and bring fresh ideas that challenge the status quo. This stimulus in turn incentivises others to adapt. Simply put, small businesses are good for UK plc (of which they represent 99.9 per cent of businesses). It goes without saying then, that they should be encouraged to flourish.

And many are. Confidence in an improving economy is being felt more strongly across British enterprise, and a positive economic outlook sees burgeoning ambitions for growth, both at home and overseas. The road to recovery and beyond, is paved with opportunity.

However, it is important to look at the wider landscape and see that the path ahead has its challenges, such as prohibitive regulation, red-tape and access to finance. 

Mark Gouldstone, client propositions manager for SMEs at BSI, commented, ‘Small business owners have long said that if the UK stifles growth here, impact will be felt far wider. It is here that small businesses need the support. It is not surprising therefore to find that research by BSI (British Standards Institution), has revealed that almost a half of SMEs don’t feel that their business is operating efficiently.

‘This research is supported by recent findings by RSA which demonstrated that 55 per cent of small and medium-sized enterprises don’t survive more than five years. Beyond survival, businesses also face considerable challenges in achieving growth with two thirds (63 per cent) of small business owners admitting that it is difficult to grow their firm and three fifths (61 per cent) of owners lacking confidence in their ability to achieve three-year continued growth.

‘In 2014, there were an estimated 5.2 million businesses in the UK – 99.9 per cent of those being SMEs, therefore this research is a concern if organisations are to continue to grow and thrive in today’s market.’

So, what can be done to ensure SMEs can achieve their growth potential?

This is where standards come to the fore, not only as a benchmark for best practice but attainment also. Standards can help push boundaries and stimulate debate on the most effective way to do things. With every ambitious business vying to ‘do things better’, standards are always evolving to fit the purpose for which they were intended.

Whatever you want to show your customers and suppliers you do, there is likely to be a standard that covers it. They are created collaboratively by experts and draw together best practice and knowledge from across industry, government, testing and certification to academia, consumer groups, trade unions and most importantly, businesses.

‘It’s vital that businesses have the necessary knowledge to be more efficient in their business to ensure customer satisfaction, improve employee engagement and to enable access to new markets,” continues Gouldstone. ‘Standards or management systems can help businesses to focus on the products and services that they deliver, their business processes and the way that they manage their organisation as a whole.

‘However, it’s not just a simple case of buying a standard – businesses should firstly understand what it is that is required for their organisation in order to improve. What are the biggest risks? What processes need to be implemented? What leadership is required? Secondly, they should ensure that employees have the necessary tools and skills to understand their part in the process – workshops, seminars and training are a key element of this. There are systems available that can help to effectively manage core areas of any business. Finally, once a standard is in place, businesses should market their achievement to potential and existing customers – this provides customers with reassurance that a company is working as efficiently and effectively as possible and are committed to quality.’

10 things that standards can do for your business

  1. Improve your goods and services
  2. Prove your commitment to quality
  3. Obtain new and keep existing customers
  4. Sharpen your business processes
  5. Cut costs – and drive profitability
  6. Help ensure regulatory compliance
  7. Give your firm a competitive edge
  8. Help you to innovate
  9. Support your export efforts
  10. Strengthen your marketing pitch

To read more, visit the BSI website.

or speak to one of the team who are highlighted on our small business page or call Debbie on 01908 889176/p>

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