Ian Carter, partner in our Accounts and Advisory team at Dains, discusses how small and medium businesses bounced back from the past few years of turbulent trading conditions and why they are key to our economy.
SMEs have had a tricky few years, amidst a global pandemic, rises in interest rates affecting demand, global supply chain issues and political unrest prompting increases in costs of goods and services. However, SMEs have navigated these many obstacles successfully, and business confidence appears to have bounced back according to a report by the FSB (Federation of Small Businesses).
In Q1 2024, headline business confidence registered at +5.5 points – the first above-zero reading for two years since Q1 2022.
Further research from the FSB shows that at the start of 2023 there were 5.6 million SMEs in the UK, accounting for 99.9% of the business population. SMEs provide three-fifths of UK employment (16.7 million) and around half of turnover - £2.4 trillion (53%) - in the private sector.
This is hugely important because without small businesses surviving and navigating market conditions, our economy would collapse. In the West Midlands, Dains works with a wide range of owner managed businesses, from leisure and hospitality to manufacturing, property and construction and professional services.
Those businesses which rode out of the recent difficult trading conditions were the ones which didn’t panic and make short-term decisions. Instead, they managed their cash really well and utilised all of the available support they could to navigate the storms including furlough claims, VAT changes and bounce back loans.
Small and medium enterprises are nimble and able to make decisions quickly due to their size. The key to being able to do this is to ensure you have a full understanding of your management information and what this means for your business. The organisations which invested in IT and cloud-based accounting software also had the advantage of gaining a real-time view of their cashflow. Having all of this information at your business’ fingertips means that you can make informed decisions and also have a clear mid-term strategy.
The recent findings from the FSB prove what we already know that owner managed businesses are absolutely robust and able to weather the many challenges which they face. Working with small and medium owner managed businesses throughout my career, I see how much blood, sweat and tears goes into each and every one of them. What sets them apart is their passion to succeed and the number of hours and hard work they will put into making that a reality. So, more than anything they appreciate time, support and consistency from their business advisors to act as partners on their journey.
