As we know, small and medium-sized enterprises (SMEs) make a huge contribution to the UK economy. But with just four in 10 surviving past their fifth birthday, there’s no doubt that there are still lots of big challenges businesses face.
Right now, businesses up and down the country will be revising their strategies and growth plans for 2018 and with that will come new problems to solve.
Here, we share four of the main challenges facing small businesses today, as told by the business owners themselves.
There are many things that affect the growth of a business. Some are external, while others are internal and different companies will face different issues.
But one thing remains consistent – flexibility is key and all businesses need to have an active approach, ready to respond to changes in their industry and in the environment.
Arabel Lebrusan runs her own self-named ethical jewellery company. She says it’s time for her business to reach the next level.
“I took the big leap this year to go travelling for four months and still run my company from my laptop,” she says. “I had high hopes that my small team of three would keep things running while I was away.
“Problems obviously came but they also got fixed. And I learned how to stop being a bottleneck and let the team get on with it. For us, 2018 is all about growing. We have been in business for the past five years and it feels like a perfect time to reconsider what we have achieved and where we are going next.”
Rowena Perrott, general manager at cardboard box supplier Boxtopia, agrees that sustained growth will be the biggest challenge for 2018.
“Every industry has its giants. If not Amazon, Google or Apple, then some other international corporation will still be there to take the lion’s share of the market,” she says.
“The packaging industry might not receive much air time but as a small business in that space, we still have large, international companies to compete against.
“2017 saw us taking big steps in the fight for online exposure. Marketing strategies that emphasised our key products and unique selling points helped us to draw in new customers who were attracted to our bespoke product business model and personable customer service.
“The challenge for 2018 is maintaining the gains we’ve made and going further still. This will be helped by a brand new website – watch this space! – and a focus on what we believe makes our business better than anything else out there.
“If you want people to choose you over the Amazons of the world, you have to give them a reason why. That’s what we’ll be doing in 2018.”
Ready to grow your business but need some help with the process? Keir Thomas-Bryant share some tips on managing business growth.
Entering new markets
It’s not easy for businesses to break into new markets – at home or abroad – and there’s no doubt that Brexit will make it even more difficult for those looking for international growth.
But navigate the choppy seas and you’ll reap the rewards.
Nik Williams is the sales director at shredding firm Shredall SDS Group, which has recently diversified its offering to help it enter new markets.
He says: “Diversifying in this way is undoubtedly a challenge. It involves implementing new processes and working out how the new service should be integrated into the work we already do.
“However, starting a new service is also a fantastic opportunity that we’ll be looking to take full advantage of into 2018 and beyond. It’s a natural next step for the business, complementing our existing services at the same time as expanding what we can do for customers.”
Lisa Forde, founder of stationery company Dotty About Paper, is gearing up to branch out into two key areas in 2018, which she says will provide an “exciting new challenge”.
She says: “We are entering the wholesale market with both new and pre-existing products. This is a big step for us, as we have always been an online business selling directly to the customer.
“We are also creating a brand new range. Although we haven’t previously worked on these items, we knew it was a market we wanted to explore.”
Need some tips on breaking into new markets abroad? Chloe Brown has some great advice on how to boost your business by exporting.
International growth brings challenges of its own, including fluctuating exchange rates which are difficult to budget for. Brexit has also had an impact on pound sterling, which has no doubt affected businesses across the board, while the price of imported goods has increased.
Luigi Pannozzo, managing director at gazebo and marquee supplier Gazeboshop, has his own concerns around increasing business costs.
He says: “The biggest challenge of 2017 was the volatility in the value of the pound against the US dollar. This volatility meant it was difficult to control the purchase cost of products that we would import from overseas as the exchange rate varied quite dramatically during the course of the year.
“In 2018, the biggest challenge looks like it will be the cost of the goods as raw material prices are increasing across the board. This includes some of our main materials such as steel, aluminium and cardboard packaging where all the prices are rising dramatically.”
Struggling to deal with increasing costs? Bryan Collins offers some useful advice on how to control your business costs.
Making Tax Digital
Making Tax Digital is HMRC’s move to digitise tax and the goal is to help you get it right – whether you’re a business, accountant or bookkeeper. Learn about what it means for you.
We’ve seen a number of new regulation changes and announcements this year, such as Making Tax Digital (MTD), while SMEs will no doubt be preparing for more as we head towards the implementation of the General Data Protection Regulation (GDPR) in May 2018.
Meanwhile, the Markets in Financial Instruments Directive II (MiFID II) will also impact how the finance industry records and stores its conversations with customers.
Mike Parkes, technical director at GoSimple Software, says it’s important to stay ahead of the ever-changing business landscape. He says: “The main challenges for GoSimple Software this year have been the changes to Making Tax Digital and the delayed launch date.
“We were geared up for our mobile app, SimpleTax, to be MTD ready for April 2018 – when MTD was originally planned to be introduced. However, this has now been pushed back to 2019.
“We have dealt with these challenges head-on and have overcome them by switching our development focus to improving the functionality of our software and developing new features for our partners.
“Looking ahead to 2018, our biggest challenges will be around educating people who need to complete self-assessment, the upcoming changes for MTD and providing an easy transition to completing a digital tax return.”
Mariah Tompkins, founder of WKM Accountancy Services, has also had to adapt to get her head around new financial regulations. She says: “For a small accountancy firm like ourselves, the largest challenge has been thoroughly understanding potential financial regulations.
“We are learning new software and methods in preparation for MTD, but there are still so many moving parts in when assessing MTD across a range of industries.
“In addition to this, GDPR is causing a storm across various places of work. These new huge changes are going to affect everyone and clients look to us for information.
“The challenge for 2018 is ensuring we know all we can about these financial regulation changes. Regardless of our firm size, we are ensuring that information is our tool and will be key in assisting various businesses next year.
“It’s challenging to keep on top of these developments but if our knowledge can be utilised to help other businesses, then the year will be a success.”
What challenges will your business face in 2018? Feel free to let us in the comments below.
Making Tax Digital: A guide for businesses
Not sure what Making Tax Digital is and how it will impact your business from April 2019? Download this free guide to find out what you need to do to prepare for it.