Business October 8, 2019 Last updated October 7th, 2019 62 Reads share

The 3 Best Ways Small Businesses Can Stay Ahead of Competition During Economic Uncertainty

Small Businesses Stay Ahead of Competition During Economic UncertaintyImage Credit:

Today’s SMEs in the United Kingdom operate in what experts say to be the most uncertain times of recent history. According to a 2019 study conducted by American Express and Oxford Economics, (about 64%) of the UK SMEs are concerned about law, policy and regulatory changes.

This comes about at the time when running a medium or small-sized business is increasingly becoming a tough challenge regardless of how best the business environment may look. That being said, what is the way forward for the UK SMEs to achieve the top spot and stay ahead of the competition while safeguarding their operation in the course of geopolitical and economic stress?  Apart from bracing themselves for the hard times ahead and cutting down operation costs, UK SMEs can adopt strategic investment as well as smart management to help change their current predicament. This is the right moment that colleagues in the accounting and finance sector need to play a very significant role to ensure that businesses navigate effectively, the existing barriers of business operating environment.

Stay ahead of the latest technologies

Rapidly changing technology is one of the major concerns that SMEs need to contend with. This case scenario became apparent in the study conducted by American Express. It was found that applying new technology is the ultimate business challenge the UK SMEs are looking forward to addressing in the coming three years where a whopping (65%) was in recognition of its potential to unlock business opportunities. Furthermore, the study revealed that the UK SMEs are gradually changing their focus starting from infrastructure to value-added technology all the way to ranking workforce for the productivity tools regarded as their priority today and in the future. All these are followed by faster and more reliable communication systems. Sadly, less than 50% of the UK SMEs perceive themselves to be very effective at integrating new technology in comparison to their immediate competitors.

As a matter of fact, this notion is just but a stumbling block that needs close scrutiny prior to committing any investment. But those SMEs that are in a better position to acquire a top position in using the new tech will have greater advantage when future-proofing their businesses.

Accountants who have worked with hundreds of businesses can be a good starting point to help you assess your investment in technology and if it’s sufficient when benchmarked with other similar businesses.

Streamline payments in order to get ahead

Streamlining payments is one of the best ways SMEs are likely to get ahead of the competition while letting them have greater control over the flow of their cash. Research has revealed that 68% of the UK SMEs are of the opinion that the flow of cash plays a crucial role in operating their businesses although (about 30%) experience difficulties in accessing the finance they so desperately need to run their businesses. Most of the SMEs depend solely on the old-fashioned payment systems as well as single funding sources, leading to delayed payments. As a result, SMEs find themselves with uncertainties of the arrival of their income and thereby cannot maintain an accurate cash flow forecast.

Access to constant cash flow can safeguard against hardships ahead and also help companies to remain nimble and flexible when it comes to responding to growth opportunities. In fact, this is a great advantage as far as expansion is concerned. In addition, moving away from the traditional forms of payment (such as paper payments) can save time, improve efficiency and reduce the risks of common human errors.

Currently, there are quite a number of available funding solutions in the supplier payment spaces that are meant to make payments effective and easier for customers. All these solutions are there to encourage efficient payments while enabling businesses to have their hands on most of their cash for a longer period of time in order to pay their suppliers in a timely manner. For example, the supply chain financing indicates that as long as the invoice is approved, the supplier can be paid by a third party directly in accordance with the buyers’ instructions. In this case, the buyer can hold onto its capital until a single consolidated invoice is received from the third party towards the end of the supply chain financing billing cycle. Other solutions can help in the reduction of billing errors by simply assigning a single-use account-number to every transaction. This means when the suppliers charge the virtual account numbers, the charges are verified immediately against the currency amount as well as the date range set aside by the buyers. This is done to ensure that each transaction data is aligned to reduce the risks of misunderstandings or rather tension between the buyers and suppliers in a bid to make it easier for the invoice reconciliation. However, the greater control and the additional visibility over-spend that is offered by this type of process is normally valuable at the time of greater uncertainty, especially where the planning cycles are compressed.

A competitive accounting firm or your current accountant should be able to help you set up effective payment systems and cashflow control methodologies.

Accountants

Consider dipping your toe into foreign waters

It can be intimidating when it comes to the process of exporting abroad especially to those approaching it for the first time. This observation was openly reflected in a study where it was discovered that 64% of the UK SMEs think that it is extremely hard to have access to new export markets now than it was 3 years ago. Only 16% of the UK SMEs admit that their supply chains have increasingly become more international compared to the previous 3 years.

The beneficial aspects of exporting are likely to become transformative for SMEs. With the right preparations, however, the risks can be significantly minimized. Most of the time, the most important step to take is to do some research. This is where SMEs need to take their time in analyzing which type of products can be exported in relation to where the demand lies, the best way to go about this is by conducting the research to find out those markets where their immediate UK based competitors have emerged successful and then travel there to assess the situation in person.

After making the decision, the next step should involve the building of informed, data-led strategies that can be applied to contend with the policies, regulations, customers and social or cultural hurdles like the language barrier. Luckily, there are several organizations that can assist by equipping SMEs with the relevant information regarding all these hurdles. A better example is the Department of International Trade which acts as a rich source of information about international trade and markets online.

In the next stage, SMEs should consider how their best route to markets will look like. The most effective way for SMEs to succeed is to carry out the exploration of the exporting markets through trial sales of specific products. To achieve this goal, a strong and well-established digital presence will be an essential tool. In case selling online doesn’t become viable, then SMEs can consider using local agents, distributors, licensing or franchising their goods overseas. Speak to your accountant or business adviser to be pointed in the right direction, if you do not have one, try looking for an accountant in London or an accounting firm local your region, if you are comfortable with the technology you could also go for online accountants.

Through the inspirations highlighted in these three steps, SMEs can ensure that they are fully protected and also set up for their future success in the face of political or economic changes.

Thao Le

Thao Le

Thao Le is a Senior Accounting Manager at Clear House Accountants. Having worked and grown in the industry for a number of years she is now responsible for a team of accountants, tax planners and bookkeepers, working with them to help clients from a variety of industries, grow, save money and plan for the future. Thao holds a Bachelor and Masters degree in Accounting and Finance and is currently working towards her ACCA, she is also a Xero and Quickbooks Certified Advisor. Thao believes her expertise lies in high-level tax planning, management accounting and strategic business planning based on financial performance and business analytics. Her experience, expertise and knowledge make her an exceptional contributor at clear house towards various articles and research content.

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