Learn the new techniques SMEs are using to thrive through economic uncertainty
Following the decision to leave the European Union (EU), we are living in times of uncertainty. Interest rates are down, while housebuilding and construction output have slackened in the face of economic concerns.
But this message of worry does not seem to have affected small to medium enterprises (SMEs), who are bucking the trend with companies established at a faster rate than ever before.Recruitment agencies are also experiencing an acceleration in growth, giving encouragement to all budding entrepreneurs out there. Why are SMEs continuing to succeed? We spoke to businesses to find out.
SMEs established at record rateThis year has shown SMEs are starting up at a higher rate than ever before.
Statistics for this come chiefly from Startup Britain, a campaign set up by the then-Prime Minister David Cameron in 2011 which aimed to encourage enterprise in the UK.
In the first half of 2016, 342,927 new businesses were registered by Companies House. Last year, a start-up pace of 70 new registrations an hour was recorded. Those figures from the first six months of this year eclipse this by a further 10 per hour.
The feelgood factor increased further because insolvency is down 3.6% from last year too.
Britain is embracing the entrepreneurial spirit and running a business is now an aspiration of many youngsters.
Unsurprisingly, London recorded the largest number of new businesses during this time, while Manchester and Edinburgh both saw in excess of 4,000 new businesses registered.
Significantly, the Brexit vote has not resulted in panic; instead, businesses have sought to tighten their collective belts and focus on the variables they can control - an encouraging message for SMEs and those looking to strike out and establish their own organisations.
At the time of writing, more than 450,000 startups have been created this year, which is well on track to go past 2015's total of 608,110 - itself a record for a calendar year.
A vast number of recruitment agencies fall under the umbrella of SMEs. They too, are still flourishing despite Brexit.
Research from Sonovate has found that the first half of the year saw a 10% rise in new agencies in the market, compared with last year.
At 2,926, the figure is well on course to usurp last year's 5,110 agencies in the UK, which was a massive 144% more than the number of agencies launched in 2010.
We've clearly moved away from the historic industrial age ambitions of getting a good education and a job for life, and now people are more determined to take control of their own destiny.
Already established agencies are finding that they are experiencing growth too. Both quarters of 2016 reported a rise in growth when compared to the respective quarters of last year 10% higher than in Q1 of 2015, and 7% more than Q2 of the same year.
Why are SMEs continuing to succeed?The outlook is certainly positive for prospective business owners and entrepreneurs if the latest information is anything to go by. SMEs are maintaining their success. But why is this? What makes them prosper, especially in this year of uncertainty?
Importance of technologyThe most commonly occurring theme when we spoke to business professionals was the effect the rise in technology has had in helping entrepreneurs establish their companies.
Specifically, technology is helpful for those organisations just starting out who perhaps need to keep their overheads as low as possible. What better way to do this than launch a company online? Premises don't need to be leased and you can focus on establishing yourself before expanding to dedicated premises and further staff members.
A new business that has taken advantage of the "influx of technology" in recent years to start an online watch repair service is Repairs By Post.
Jonathan Goldstone, who set up the company, explained how SMEs are able to flourish: "SMEs are managing to succeed today because of the rise in digital technology. You can set up a business from your phone, on the bus and even at your current job. There aren't the same logistical ties there once were."
The company has benefited from the rise in technology by providing a service to customers that can be done without them physically having to go to a shop.
According to Jonathan, giving customers the convenience of online services rather than having to visit a particular store is another reason why SMEs are able to succeed. It makes it easier to use the service during the daily grind when there may not be time to visit a store.
He said: "We started our unique business model when we realised that people are working more hours than ever and are unable to visit the traditional retail shops they once did.
It appears that start up business owners are starting to work for themselves due to the rise in technology. It is easy to start and maintain a business from anywhere in the world.
"People don't want to visit retail shops, we are much more comfortable behind a screen than face to face. We took our inspiration from Uber, who offer an identical taxi model to typical services but the online aspect appealed to customers and they now run the market."
Many of these concepts aren't necessarily new. Heck, we've all indulged in internet shopping. But the ability to set up and run a business out of the office environment is a game changer for SMEs.
It shows the power of remote working, and further helps to solidify the impact SMEs can make within industry.
A spokesperson for Repeat Logo echoed these sentiments. "It appears that startup business owners are starting to work for themselves due to the rise in technology. It is easy to start and maintain a business from anywhere in the world."
Advances in the internet have also helped. Reliance on tedious dial up connections are gone (for those old enough to remember). The benefits of the internet and the way it removes traditional constraints are highlighted by Gary Lyons, who founded Plastic Box Shop - an SME that is targeting £10 million turnover after less than seven years in business.
He said: "Better broadband and the internet has also brought a lot more opportunities to people with good business ideas. In the past, a lot of businesses would have been limited to their geographical location. These days anyone can do business with anyone around the world."
You can set up a business from your phone, on the bus and even at your current job. There aren't the same logistical ties there once were.
Social media / advertisingWe've covered the benefits of social media for SMEs at length but access to this is undoubtedly a factor in the continued success of SMEs.
I know what you're thinking - this is again due to the rise of technology - and you're right, but there are different strands that can be used to the betterment of a company.
Certainly, the likes of Twitter, LinkedIn, Facebook, Instagram and Snapchat can be used to increase the reach to customers, strengthen relationships with existing customers, draw in new ones that would be previously difficult to reach, and reinforce the brand you are trying to create.
A social media presence is crucial for SME success in 2016.
The importance of branding was discussed by Phil Foster, Managing Director at Love Energy Savings who said it's crucial for SMEs because of "recognition, trust, and being found."
He said: "Branding is the way of defining your business, what it's all about, looks, sounds and appears like. It will keep customers coming back and ensure loyalty."
The use of social media has helped SMEs to advertise to and communicate with customers much more easily than in the past.
SMEs can market their businesses across multiple platforms easily and reach audiences not associated with traditional 'spray and pray' tactics.
Repeat Logo's spokesperson said: "Communication with customers is key and an online presence appears to be more trustworthy with a professional, active social media and website presence. In many cases, this is why start up businesses fail - understanding your customers is key to a successful business."
The final point made there stands out. Being able to use advertising tools, both social media-wise and with a company website, helps to give a personal feel and therefore creates a bond of trust with customers.
All of this is possible because of technology. An office base isn't needed. To start with, an SME may not need full time staff either. But the access to the endless opportunities marketing and advertising can bring means SMEs can build up a solid base of customers, while using innovative methods to expand on this.
Jonathan Goldstone believes SMEs can now market their businesses better than ever before, and target particular audiences.
He said: "SMEs can market their businesses across multiple platforms easily and reach audiences not associated with traditional 'spray and pray' tactics. We can narrow our social media ads to those we know will engage with our service and share online blogs with others in the industry. This creates a web of connections that strengthens marketing efforts."
The use of social media has helped SMEs to advertise to and communicate with customers much easier than in the past.
Change in attitudesLong gone are the days when people looked to get a job and keep it for life. According to one of the country's leading business advisors for SMEs, that mindset has been replaced by one ruled by an entrepreneurial spirit and desire to stretch personal ambition more than ever before.
Carl Reader is the author of The Startup Coach and The Franchising Handbook, with his advice covering everything that a business owner needs to know.
He believes that SMEs are still thriving despite the Brexit uncertainty and that while "we've got a potentially volatile couple of years ahead," Carl is confident that businesses who focus on their strengths will come through these years stronger than before.
The main reason he believes SMEs are continuing to be successful and more are forming than ever before is due to "entrepreneurial spirit".
Better broadband and the internet has also brought a lot more opportunities to people with good business ideas. In the past, a lot of businesses would have been limited to their geographical location. These days anyone can do business with anyone.
In light of the news 80 new companies are being formed each hour, he said: "I feel that this is because Britain is embracing the entrepreneurial spirit and running a business is now an aspiration of many youngsters. We've clearly moved away from the historic industrial age ambitions of getting a good education and a job for life, and now people are more determined to take control of their own destiny."
It helps that media coverage paints a picture of owning a business as a popular and increasingly viable option. This, and the recorded successes, will surely increase the number of startups.
At an organic level, it means more people are getting on the ladder, therefore even more SMEs are likely to succeed if they marry this spirit with the advances in technology and social media.
It can only mean good things for SMEs.
Will SMEs continue to succeed?With 80 companies established per hour, and the total number of startups already higher than 450,000 this year, it is clearly an exciting time for SMEs and budding entrepreneurs bursting with business ideas.
Despite the uncertainty brought about by the EU referendum, there is no reason why SMEs can't succeed. Indeed, the change in mindset, along with proficient use of technology and social media / advertising methods means these companies and many like them will continue to be successful in the future.
Written by John Train