Small businesses disproportionately rely on external finance for their business operations, cash flow, and investment opportunities as they often don’t have excess capital available to expand and invest without outside funding.
Huge external shocks, like the Covid-19 pandemic, have a negative impact on the availability of finance for small firms, as they are seen as riskier to lend to in general.
There are worrying signs that loans to small businesses are becoming more expensive and harder to come by in the first place. Our research finds that only 12% of small firms applied for credit in Q2 2022 with only 45% reporting that the application was successful, down from 55% in the same quarter last year and from the pre-pandemic acceptance trend of 64% (for 2014–2019).
The constraints on lending to small businesses will inevitably have a knockon effect on investment and, ultimately, on productivity and growth. In line with the low rate of successful finance applications, we found that small businesses’ investment intentions in Q2 2022 fell to a level not seen outside the first lockdown in Q1 2020, with only 23% of firms saying they plan to increase capital investment over the next quarter compared to the last.
Small businesses that are struggling to repay their bounce-back loans should ensure they are using all available options, such as the Pay As You Grow scheme which offers various forms of relief, including a term extension, an interest-only repayment period, and a payment holiday.
The more lenders and financial products there are in the market, the more efficiently it will operate, resulting in better outcomes for both small businesses and the economy.
The more lenders and financial products there are in the market, the more efficiently it will operate, resulting in better outcomes for both small businesses and the economy.
Payments failing to come in Intensifying the cashflow problems many small businesses face is the longstanding late payment scandal, made even worse by the pandemic, with corporate customers treating small suppliers as a free line of credit. Half (50%) of small firms in Q2 had experienced late payments, and a fifth (22%) say the problem is getting worse.
The Government has rightly identified greater board accountability as the key to spurring change in this area, and we want to see urgent action before it’s too late for thousands of small firms.
Barely two years on from the Covid-19 pandemic, small businesses in the UK are facing a range of critical challenges, some of which are overcome through open banking.
Risingenergy costs, soaring inflation, overdue payments, changes to the tax regime, or a high employee turnover urgently need addressing if the UK is to remain an economic world leader. Providing businesses with the tools to improve business efficiency and productivity has never been more important.
By placing transaction data back into the hands of businesses and consumers, open banking has helped thousands of UK small businesses to become more efficient and make better decisions through access to better financial products and services. The latest figures show that there are more than six million regular users of open banking in the UK.
The Open Banking Implementation Entity (OBIE) is at the forefront of creating open banking software standards and industry guidelines and aims to drive competition, innovation, and transparency in UK retail banking. Our latest open banking impact report highlights the significant benefits open banking provides through cloud accounting.
SMEs greater visibility and control over their business performance.
More than 900 SMEs were interviewed, with an overwhelming 77% reporting that open banking had provided them with better visibility of their financial position. Similarly, respondents reported that the technology provided them with better insights into business performance (73%), improved decision-making (75%), and managing overdue payments (63%). The statistics were positive when it came to the value of open banking in helping the firms to improve business efficiency (82%) and cut costs (59% had delivered internal savings and 64% external cost savings).
In short, open banking gives SMEs new tools to help them become more resilient, productive, and profitable. By unlocking the power of their data, businesses have real-time insights into their performance and tools to support their success even through the challenging economic climate ahead.
Small businesses are currently overwhelmed with debt acquired over the past two years that will take a significant period to fully repay, with SMEs carrying £38 billion more debt in total than in January 2020.
The report found that through cloud-based software, businesses can manage basic accounting tasks faster and more efficiently — including managing cash flow or issuing invoices — by supporting cash flow planning and streamlining business administration. Open banking is integral to this as it allows companies to connect their bank account and import real-time transactions, giving
While it is encouraging that 50% of UK SMEs are reaping the benefits of open banking, there is still more that can be done. It is vital to maintain this momentum and support the remaining 50% to seize its full potential.
WRITTEN BY Charlotte Crosswell Chair And Trustee, Open Banking Implementation Entity (OBIE)
WRITTEN BY Tina McKenzie Policy Chair, Federation of Small Businesses
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Universities are well placed to support business communities but need to do more, says Professor Tim Vorley.
Two years ago, discussions with business leaders led Oxford Brookes Business School to rethink its support for SMEs. The lessons learned have created a series of powerful tools and interventions that have proven to be highly successful in engaging and supporting more SMEs.
“I’d say it’s who we bring together and how. The business leaders who attend our programmes bring their own experiences in leadership, growth and overcoming challenges. Staff come with applied research expertise and experience in supporting business. Working with a range of great facilitators in an open way — this combination delivers real impact,” says Vorley.
Jennifer Shivas, MD of 67 Bricks, describes Oxford Brookes as “a safe space to discuss the challenges and opportunities faced by our businesses openly.”
“While many business leaders are well-networked in their field, they often can’t have the conversations they need to have with their peers. Our programmes create tight-knit groups of managers and leaders from across a variety of sectors. They learn from our academic expertise but also each other — and we learn a lot too.” says Giles Orr, Head of Business and External Engagement at the school.
Small businesses in the UK are a major part of the economy, but they need more practical support in this tough landscape.
The school offers a range of short professional education and development courses to SMEs ranging in commitment from a single-day masterclass to the Government 12-week Help to Grow programme.
Their CEO Club and Scale Up Network — both recognised by the Scale Up Institute — are facilitated network programmes with a small but diverse group meeting monthly to discuss key issues. The innovative Sustainability Basics programme, convened with Small Business Britain, was created to help businesses identify how they could become greener and more competitive.
Colleagues across Oxford Brookes Business School are engaged with businesses on a range of projects from business model innovation to organisational leadership and technology adoption. As Vorley says: “We are undertaking more projects in a collaboration with business, working to deliver real-world impact.
“As well as research, we are seeing more businesses wanting to work with our students. Businesses bring their skills to small business teams through student projects and placements. This can add tremendous value, addressing live business challenges and providing students with real-world experience that enhances their employability.”
Interested in finding out more? Email at helloOBBS@ brookes.ac.uk
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WRITTEN BY Michelle Ovens CBE
Founder, Small Business Britain
Many headlines show small businesses struggling in this economic climate. There are no easy solutions, but there should be greater recognition of the massive opportunity bubbling away in our small business ecosystem.
Small businesses make up 99% of UK business and are at the heart of our country’s recovery. They have long needed greater support and encouragement to achieve their potential which is especially true with mounting economic challenges.
The Government-backed ‘Help to
Grow’ programmes seek to address this by offering business owners the mentoring, tools, and training to develop their understanding and supercharge their growth.
As many firms as possible need to be accessing Help to Grow. To explore ways of expanding the numbers of businesses taking part, we’re piloting a new, online-only version of the Help to Grow: Management programme with Oxford Brookes Business School, funded by Lloyds Bank Academy.
But there also needs to be similar support designed for the tiniest of businesses which are not always eligible for broader programmes. These businesses — being at earlier
phases of the entrepreneurial journey – require different skills and tools compared to larger businesses.
Ensuring microbusinesses are not left out
Sole traders often struggle to take time out of running their businesses due to limited time and resources. They need support that is flexible, free, and focused on the everyday challenges they face to grow.
For our part, Small Business Britain has launched the ‘Small and Mighty Enterprise Programme’ — a free, sixweek online course offering expert guidance, peer-to-peer support, and mentoring. It is intended to fit around existing work commitments and offer inclusive learning for microbusinesses.
Sole traders often struggle to take time out of running their businesses due to limited time and resources.
We need more ideas and solutions like this. The private and public sectors need to come together to drive economic recovery by focusing on how to nurture skills and inspire growth. This is undoubtedly harder to do in tough times, but it is important now more than ever.
Paid for by Oxford Brookes Business SchoolEntrepreneurs can serve as engines for economic growth and innovation.
With SMEs being the backbone of UK businesses, all eyes are on the new prime minister and whether their policies will rejuvenate the economy.
Amidst the worst cost of living crisis in decades, the biggest hike in interest rates in 27 years, energy shortages and a looming recession — it’s hardly surprising that the economy has taken centre stage in the candidates’ messaging.
The new prime minister should heed the wishes of the entrepreneurs who could accelerate the UK into a new phase of sustained prosperity. Entrepreneurs can serve as engines for economic growth and innovation.
Members of the London chapter of Entrepreneurs Organisation (EO) had their say on the new prime minister’s proposed policies such as halting the rise in corporation tax, overhauling business rates and reversal of the National Insurance rise.
Planned tax reforms were at the centre of Liz Truss’ campaign. Her goal of cutting £30 billion within weeks of taking office — paid for in part by borrowing — has been popular with Conservative party members. She believes these cuts will incentivise investment and tackle the spiralling cost of living, but UK business leaders seem unsure.
The total cost of the energy package is expected to cost around £60 billion from October 22 until March 23 for households and businesses. While the mini-budget might look like good news for Britain’s highest earners, UK entrepreneurs are concerned about the help offered to their businesses and employees who will still be feeling the squeeze of the cost of living crisis, high inflation and record interest rates.
Personally, I can’t see how it’s going to benefit my younger team members. In addition to battling the cost of living crisis, many are having to service huge amounts of student debt. If we fail to address the needs and financial realities of young professionals in the UK, we will simply stop being a competitive economy.
If we fail to address the needs and financial realities of young professionals in the UK, we will simply stop being a competitive economy.
EO London Chair and cofounder at Amazonia Impact Ventures, Pajani Singah, is just one entrepreneur concerned by Truss’ spending plans. “There are those who say that continued borrowing means that future generations will be left to deal with today’s economic frailties. While that’s true, it ignores the very real costs of borrowing in the present.”
While her loyalty to former Prime Minister Boris Johnson was appreciated by party members, our members and many business leaders are unsure her radical cuts will be beneficial to SMEs and their employees in the long term.
“The state has to bear the cost of servicing debt right now; and that’s money that could be spent on healthcare, education and investment in entrepreneurial programmes,” says Singah.
Jane Hales, cofounder at Sapio Research and London Chair of EO Accelerator, also shares concern over Truss: “I fear for the future of the public sector. Friday’s tax cutting, environmentally damaging budget worries me,” she says. “Trickle-down economics doesn’t work. The White House joking about suspending the UK’s ‘special relationship’ tells us that we need to know about how the rest of the world is viewing the UK currently.”
“As a business owner, I fully endorse hard work and choosing where you’re able to spend your money, but I appreciate that not every job with value to society is well paid. Taking money from me via corporation tax on my profits feels removed and acceptable in order to keep the wider society going,” Hales comments.
We are a global association of more than 15,000 entrepreneurs. Each member has a business turning over a minimum of USD 1 million in annual revenue. Diverse in gender and ethnicity, as well as industries represented, the EO London chapter provides an insight into what business owners want from the prime minister.
EO Accelerator is our network for first-stage entrepreneurs. It’s a learning and support network consisting of business owners generating between USD 250K and USD 1 million looking to take their business to the next level.
WRITTEN BY Rachel Irvine CEO, Irvine Partners, EO London Chapter Communications Chair WRITTEN BY Pajani Singah Co-founder Amazonia Impact Ventures & President EO London Chapter WRITTEN BY Jane Hales Co-founder Sapio Research & EO London Accelerator ChairSmall and medium-sized enterprises (SMEs) are often described as the engine of the economy, helping to drive growth and prosperity for all. Public entities recognise this and deliver programmes for support.
Witha global reputation for collaborating with SMEs and start-ups, a leading university is providing businesses with mentorship, critical skills, and access to professional networks. Recognising the importance of SMEs, Northumbria University provides bespoke support across a variety of sectors through its delivery of the Government-funded, Help to Grow Management programme, which is led at the University by Dr Matthew Sutherland.
A Government-subsidised programme for business growth
Rolled out nationally by the UK’s leading business schools, in partnership with the Government and the Chartered Association of Business Schools (CABS), the Help to Grow Management programme is a practical course designed to empower innovators and senior leaders in small and medium-sized businesses.
Associate Professor at Northumbria’s Newcastle Business School, Dr Sutherland comments: “We’re keen to spread the word and would encourage SME leaders in any sector to sign up for this invaluable programme which will help them to tackle challenges, hone their leadership skills, and really drive innovation and future growth.”
Help to Grow Management gives SMEs the opportunity to boost productivity and develop the skills they need to further their business and professional development. Dr Sutherland adds: “We’re also encouraging SMEs to work with the university as suppliers in order to support the regional ecosystem and draw upon external skills and expertise.”
To help businesses access the programme, 90% of costs are subsidised by the Government as part of its commitment to support business recovery postpandemic, meaning employers will pay just £750 of the £7,500 programme fee.
The 12-week programme is designed to fit alongside full-time work commitments. It is built around a practical curriculum that includes modules such as leadership, strategy and innovation, digital adoption, employee engagement, sustainability, marketing, responsible business, and financial management; as well as the development of a tailored actionable growth plan to help each SME to reach the next level and realise its potential.
Delivered in an accessible format by a range of experts – including entrepreneurs, leaders of the small business community, respected academics with commercial expertise and small business know-how — Help to Grow combines practical learning with 1:1 support from a business mentor, alongside peer-topeer support via online and face-to-face sessions.
Speaking of his experience on the programme, Trevor Pill, Executive Director of Onyx Health, comments: “The topics are very accessible; everything is communicated in a clear, practical, and no-nonsense way. The learning sessions are led by people with credible industry and commercial experience, so it’s all ‘real world’ stuff and directly applicable, rather than theoretical business speak –something which is very important to me.”
“I’ve also found the mentoring sessions brilliant. My mentor is a great sounding board for the ideas I’m developing for the business and can provide an objective perspective. I always leave each mentoring session with an action to take forward,” he adds.
Support beyond the programme Professor Hannah Hesselgreaves, who is co-leading the programme alongside Dr Matthew Sutherland, says: “Participants of the Help to Grow programme have benefited from exposure to a range of businesses experiencing similar challenges, and personalised one-to-one support from a business mentor. The strong sense of community built among participants has been amazing to see and cohorts remain in touch, offering peer support after the programme has finished.”
Newcastle Business School was accredited with the Small Business Charter Award in 2015. The national accreditation recognises business schools that excel in supporting SMEs and the local economy, and are also hosts of the Why Small Business Matters Podcasts.
WRITTEN BY Dr Matthew SutherlandIn a post-pandemic world, customer experience has evolved from being a very hot topic to one of the most important strategies to be implemented.
The impact of widespread skills and labour shortages is a major concern for small and medium enterprises (SMEs) as they struggle to progress.
Ourdata in the British Chambers of Commerce (BCC) reports that across all regions and sectors, three out of every four firms are struggling to fill vacancies. In addition to having an impact on the morale, wellbeing, and retention of staff, these shortages are preventing firms from fulfilling their order books.
Skills shortages have been an issue for many years, but the impact of the pandemic and Brexit have brought things to a crisis. With 1.3 million job vacancies across the UK and far fewer people in the labour force than before the pandemic, we need to find solutions. Employers, the Government, education providers, and individuals all have a role to play and need to work together.
We believe that a local approach is key to ensuring the right match between workers and businesses in communities. For employers in England, engaging with the new Local Skills Improvement Plans (LSIPs) will help ensure the right training is available for people in their businesses as well as for those in the wider community.
Customer
experience can be defined as the sum of all interactions that a customer has with your business, and it has become one of the most critical differentiators in many industries.
Whether you operate in a B2B or B2C market, customers have come to expect more from companies, so it is a pivotal time to assess if the customer is at the focal point of your business.
At Haydock Finance, we are an intermediary-led business, meaning that we serve two customer groups — our introducers and their SME clients — with a range of asset finance solutions.
For us to develop an improved customer experience, we needed to understand why and how both groups interact with us — a process known as mapping the customer journey. The goal of mapping is to identify the journey’s touchpoints, where your customer interacts with you via your marketing material, sales experience and supporting customer service. It is also about discovering the obstacles that have a negative impact on how seamless your customer journey is.
Mapping is a highly collaborative exercise, where you ask many members of your team to step outside of their usual roles and encourage them to think like a customer.
A focus on customer experience cannot be successfully sustained if customer-centricity is not embedded into the culture.
We had to first create a clear customer experience vision as part of the strategy. When we looked deeper into our processes and procedures, we identified that to achieve greater customer centricity, we needed to improve the training provided and empower our teams to work more freely. We found that when the team was empowered, they were more likely to make real-time decisions in favour of the customer and go above and beyond to deliver a great customer experience.
Technology plays a critical role in providing an enhanced customer experience. At Haydock, we also believe that it’s vital that our introducers and their SME clients can reach a member of the team when needed. People tend to remember a good value-added experience interacting with a human than an automated outcome.
Identifying ways to improve the human connection within your business goes hand in hand with developing a leading customer experience.
Schools and colleges must welcome and embrace businesses that want to help young people understand career options in their area. There needs to be a greater focus on the technical training and apprenticeship routes that lead to sustainable jobs.
Creating the right environment for businesses to invest in skills, and individuals taking charge of their own career development, is key to resolving the skills shortage. The BCC is calling on the Government to use the tax system to stimulate more private sector investment in training. At the same time, we need a more agile skills system with the flexibility to respond quickly to the changing workplace. Employers are telling us they want greater access to shorter, more modular courses that help people get the skills they need quickly.
Of course, there are times when skills are needed urgently and cannot be found locally or nationally. This is when the UK immigration system must help firms fill job vacancies, and we at the BCC are campaigning for an urgent review of the shortage occupation list (SOL) to include more jobs at more skill levels.
Tackling this issue must be high up on the priority list of the new prime minister to ensure firms can keep their doors open during these challenging times.
WRITTEN BY Jane Gratton Head of People Policy, The British Chambers of Commerce
magazine1 recently reported that Leicester is the most entrepreneurial city in the UK with nearby Northampton and Kettering taking the top spots as entrepreneurial towns.
Whether SMEs are seeking executive education, startup support, student placements, sustainability advice, business-focused events or research to drive innovation, business schools can help.
In turn, engagement with SMEs enables business schools to provide students with high-quality work placements, incorporate real-world challenges in the curriculum and showcase lectures from inspiring business leaders.
SME leaders often find themselves tied up with the daily running of their businesses with little time to step back and engage with the available opportunities. For some, this is significant as many business leaders find themselves running successful businesses with little or no support or training in management.
The University of Leicester School of Business is an established part of this growing business ecosystem alongside key partners including the Leicester Innovation Hub and Space Park Leicester.
The 90% Government-funded Help to Grow: Management Course is a prime example of the role business schools can play in supporting SME development.
It is aimed at decision-makers in SMEs with 5–249 employees and delivered by Small Business Charteraccredited business schools across the UK. The course supports businesses to innovate, boost productivity and build resilience.
Having previously delivered similar courses including the Small Business Leadership programme and Leading to Grow programme, the University of Leicester School of Business is well-placed to provide Help to Grow: Management. The school is delighted to have supported 175 SMEs in the East Midlands and East of England over the past year.
The course is completed over 12 weeks on a part-time basis and covers key topics such as strategy and innovation, digital adoption, winning new markets, employee engagement, responsible business practices and leading change.
With a commitment of five hours a week, the experience includes online seminars, face-to-face workshops, online peer group calls and ten hours of confidential one-to-one mentoring leading to the creation of a growth action plan.
It has been game-changing for many SMEs. Sue Keogh, Director at Cambridge-based marketing company Sookio, says: “The course is so valuable for anyone with an established business who wants a fresh perspective so they can develop their growth strategy. I’ve never had any formal business training, so learning about models and approaches was particularly useful. I had several penny-dropping moments in the peer sessions, and the mentoring process helped me overhaul my business strategy completely.”
Help to Grow: Management is delivered flexibly online but also includes four half-day workshops in person at Leicester or Cambridge.
Recent feedback from participants revealed that in-person workshops bring the course to life with greater engagement, richer collaboration, more vibrant networking opportunities and increased application of knowledge. Nisha Ravat, Director at Leicester-based grocery delivery business Green Tomato, agrees:
“Face-to-face modules enabled discussion of how the learning can be applied to our own businesses. I have since gained confidence approaching different sectors to grow my business and am already seeing the benefits. The face-to-face aspects were priceless as we’re all in similar situations but at different stages of our journey. We all had so much to learn from each other.”
Reference 1. https://startupsmagazine.co.uk/article-uks-top-10-most-entrepreneurial-townsand-cities
Read
at le.ac.uk/ helptogrow
WRITTEN BY Ian Harmer Business Coordinator, University of Leicester School of BusinessBusiness schools can be impactful drivers of SME development through contributions to building business communities, inspiring fresh perspectives and enhancing the capabilities of business leaders.Paid for by University of Leicester School of Business WRITTEN BY Sue Keogh Director, BY
Creating the right environment for businesses to invest in skills, and individuals taking charge of their own career development, is key to resolving the skills shortage.
~Jane Gratton, Head of People Policy, The British Chambers of Commerce