The Future of SMEs

Napoleon, stats, innovation, bottlenecks and the way forward. It's all here in an analysis of the SMEs in the UK's tech sector.

SMEs are one of the flagbearers of the UK’s economy. A report by the Federation of Small Businesses (FSB) suggests that SMEs in the UK house 99.9% of the business population and contribute to half of the turnover in the private sector.

As per the Department for Internal Trade, an average small enterprise in the UK shelters 50 employees with €10 million (£8.5 million) annual turnover while medium enterprises can have around 250 employees and a yearly turnover of €50 million (£42.9 million).

Napoleon was right when he described Britain as a country of shopkeepers. Since time immemorial, SMEs have thrived in the nation. They are known to create jobs; the sector has employed more than 16.3 million workers in the UK, absorbing most of the skilled and semi-skilled tier.

Moreover, the UK’s B2B sector is expanding at an unprecedented pace, with 300,000 SMEs in the ICT sector alone.

How Firms Have Stabilised Their Dominance

Paddle, a B2B revenue delivery platform, has managed to raise $93.3 million (£68.2 million) in Series C funding. SMEs are essential in ensuring a holistic supply of fresh ideas, and in turn, making markets dynamic.

Companies like Wise (formerly TransferWise), Uber and OakNorth have made sure to stabilise SMEs’ dominant position in the global market while encouraging competition.

Wise’s rival in the B2B sector, TransferGo, has already carved a niche in the international money transfer market.

Similarly, Onfleet is assisting small logistical companies to manage last-mile deliveries through real-time updates, connecting drivers with customers and analysing clients’ data.

Another example includes the promising story of Akoni and how the entity used machine learning to create a cash management solution and create a level playing field for SMEs struggling with an evident digital divide.

With SMEs known to survive shocks in the economy relatively better than multinational brands, the statistics in the arena look promising.

Bottlenecks in Leveraging Potential

With stringent lockdowns in place, most SMEs lost their business to the COVID-19. Many others lost hopes of marking a reentry. The pandemic called for upscaling available IT resources by SMEs.

However, the sector had already been grappling with the digital divide way before the tragedy struck. Crashed systems, server failures and network downtime wreaked havoc on some SMEs in the UK.

Another challenge that troubles the sector is the lack of budgetary incentives to ramp up its infrastructure, track spendings and reduce logistical costs.

SMEs are now looking for third parties to digitise their networks. London-based SalesTrip is supporting businesses, especially SMEs, to manage their expenses and has already grossed $1.4 million (£1 million) in its seed funding round.

Most SMEs today are struggling with export barriers, including high tariffs and regulatory compliance. Further, companies involved in data collection and operating in their closest potential market, Europe, are susceptible to hefty fines for non-compliance with GDPR.

London-based Arqit is now developing a quantum-enabled platform to avert cyber breaches and protect user data possessed by businesses and governments.

As per McKinsey, SMEs spend 74% of their time on non-core activities, thus killing productivity and increasing business costs.

Furthermore, the FSB has already warned SMEs of late payments standing at a staggering £6,000 per enterprise.

The Way Forward

SMEs are the backbone of any national economy, and no country would risk the downfall of a potential sector.

To support SMEs through a period of crisis, the UK government has launched innovation loans where SMEs will be granted loans through a competition process. Since its inception, more than £156 million has been awarded to 200 businesses.

Businesses with breakthrough ideas can ramp up their production with the Smart grant options. Moreover, London launched a comprehensive Innovation Strategy to infuse SMEs with monetary benefits and encourage R&D. The Sustainable Innovation Fund, the successor to Innovation Strategy, invested close to £134 million in 1,200 UK business hubs.

Even private entities are making efforts to support the submerged sector. Vodafone has partnered with Udemy to offer V-hub, a technical guidance program with 150,000 courses to help owners digitise their small businesses. With courses on AWS certification, data science and AI, business people will now be able to cut down their administrative costs and potentially reach fiscal stability.

BankiFi, a Manchester-based fintech, has also offered to help SMEs with financial management. Trouva is another digital platform where owners can set up their independent shops and interact with customers. The company has already raised $35.8 million (£26.2 million) and is looking to expand.

Meanwhile, Amazon is also looking to build a profitable partnership with SMEs in the UK. Amazon Business is assisting small shops to reach business customers, regardless of size, with minimal digital literacy. Most SMEs are now striving for Amazon’s Climate Pledge Friendly store to offer environmentally-friendly business products. With Amazon Business, SMEs in the UK managed to gross £300 million in 2020 despite a rigorous lockdown.

Conclusion

SMEs are known to foster innovation, as in the case of Tessian which uses AI to secure email conversations with teams when working remote. It is now pressing as ever for SMEs to generate their businesses while keeping the reality on its mind.

Most SMEs in the UK today are nascent; therefore, it is vital for both businesses and consumers to support SMEs, both financially and morally, for greater sustainability and harnessing the full potential of the nation’s economy.

Avya Chaudhary
Avya Chaudhary
Avya Chaudhary is an engineer turned writer and an ardent Potterhead. Currently associated with TechnologyAdvice as a freelance writer, Avya develops high-quality content for businesses. She also has a well-demonstrated history of working with NGOs and civil societies, and is currently pursuing her passion for community service and content marketing.
Get the Free Newsletter
Subscribe to Techrepublic UK for weekly updates from Techrepublic and eWEEK on the latest in UK top tech news, trends & analysis
This email address is invalid.
Get the Free Newsletter
Subscribe to Techrepublic UK for weekly updates from Techrepublic and eWEEK on the latest in UK top tech news, trends & analysis
This email address is invalid.

Popular Articles