THE RULES OF DOING BUSINESS FOR SMEs ARE CHANGING, SAYS REPORT


SME OWNERS are focused on what they need to do but there are signs that some could be working too hard or failing to seek the mentoring and specialist support needed to succeed in turbulent times, according to a new report. Based on a survey of 1,003 SME owners in the UK, three quarters (75%) said the rules of doing business have changed significantly in the past year and Brexit and other uncertainties mean they were likely to keep changing. The higher the business turnover, the


more likely respondents were to agree that the rules of doing business had changed – 91% of businesses with a turnover between £1-10m and 93% of those with a turnover between £10-50m shared this view, in the research carried out by accountancy firm, Menzies LLP. Of the SMEs that believe the rules of


doing business have changed, the main observation is that competitor activity has become more intense and there is a constant need to ‘stay one step ahead’ (43%). Other key observations include a belief that important business decisions have become more data driven (39%) and a need to keep track of regulatory changes (38%). Smaller businesses, with fewer than


50 employees believe the most significant changes over the past year are increased competitor activity and a shifting regulatory outlook, whereas larger businesses, with


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more than 50 employees, believe that business decisions are more data driven and there is less time to weigh up the pros and cons. Start-up businesses are also aware that business decisions have become more data driven over the past year. Julie Adams, senior partner at


Menzies LLP, said: “Small and medium- sized businesses have a much closer understanding than multinationals of how the rules of doing business have changed. This awareness combined with their size and agility has enabled many of them to adjust to the uncertain market conditions. The research shows that larger SMEs that employ more than 50 staff are acutely aware of the need to react to changes in market demand and make business decisions more quickly. For many, the ability to lay their hands on reliable and up-to-date data in a format that is tailored to the operational needs of the business is now critical.” With more changes on the


agenda, the majority of SME owners (88%) know they could be facing diverse risks in the year ahead and the biggest challenge will be predicting future market demand. The top five risk


Julie Adams, senior partner, Menzies LLP


factors identified by SME owners were cash flow difficulties; geopolitical uncertainty; breaks in supply; a lack of resources (management time and skilled people) and difficulties accessing finance. The owners of start-up businesses (those that have been trading for less than two years) believe ‘cash flow difficulties’ are twice as likely as any other risk factor to impact their trading performance in the year ahead. Only 9% of start-up businesses believe there is no obvious risk to their business model in the year ahead. Proving that they are ready for the


choppy waters that lie ahead, SME owners appear to be very focused on the things that are important to the success of their business, possibly to the detriment of their personal lives. The majority of SME owners said their top priority is ‘delivering a good quality product or service’. There were some age-related differences – SME owners aged under 40 stated that managing costs efficiently and delivering a quality product or service were their top priorities, whereas the over 40s put delivering a quality product or service and personal enjoyment top of the list. Regardless of age, SME owners agreed that spending quality time


with family and friends is not as important as running a successful business.


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