At the end of August, we were fortunate enough to attend the latest Small Business Advice Week, held at the ICAEW Headquarters in London.
Small Business Advice Week has been helping bring brands, banks and organisations closer to small businesses for over a decade.
It provides a fantastic forum for companies like us to advise small businesses and help them unlock their potential. This year, the theme was “growth and productivity” and our CSO, Sion Lewis, went along on our behalf.
Growth and productivity
99% of all businesses in the UK are small or medium sized. However, a study by Ormsby Street found that just four in ten small businesses will still be trading after 5 years.
Even after the first five years, changing economic landscapes and consumer tastes mean that well-established businesses can also find themselves struggling to stay afloat.
So why do small businesses fail? Common reasons for business closure include:
- Lack of cash. Small businesses can’t pay their bills and tax returns if they don’t have the money available. Most studies suggest 80-90% of small business fail due to poor cash flow. This is mostly due to late payments, but can also be caused by over-optimistic spending and poor financial planning.
- Lack of a clear business plan. Having a clear vision of what you want to achieve and how you intend to do it is essential to business success. It’s also useful to share aspects of your plan with others in the business to make sure you’re all working towards the same goal. Don’t have a plan? Download a free business plan template.
- Relying on one or two big customers. It’s easy to become complacent if you’ve got steady income from a few sources, but you have to be prepared for one of them to drop out. Continuously marketing your business to encourage a wider audience can improve the long-term security of your income and drive greater profits.
- Not analysing performance. From online conversion rates to income and expenditure reports, there’s a way to analyse almost everything in your business and assess its success in driving profits. One way to drive growth and productivity is to give yourself key performance indicators (KPIs), which give you something tangible to track and improve on.
- Not having a conversation with customers. This often works both ways. Small businesses don’t listen to what their customers are telling them, and it’s important to collect and act on market research. Many small businesses also fail to advertise their business properly – it’s equally important to clearly explain your business’s value to customers, so they know why to choose you over your competitors.
Facing these challenges as a small business
The landscape faced by new small businesses can be disheartening, but the very same Ormsby Street study found that 91% of small businesses will survive their first year.
This suggests that the ideas, and the passion, behind new small businesses aren’t the issue. It’s how these businesses adapt and grow that presents potential problems.
At KashFlow, we’ve created software that gives small businesses greater insight and understanding of their finances.
This can help a small business’s growth and productivity by:
- Helping small businesses get paid faster. We’ve partnered with payment processors like Worldpay and GoCardless, and introduced features like “pay online” buttons on the actual invoices to help you get paid faster. This helps improve the company’s cash flow, so bills get paid on time and the business keeps running smoothly.
- Offering data security and cloud backup. One major concern of small businesses is the security of their data, especially financial information. Storing this data in the cloud means it’s kept safe from hardware disaters like theft, fire, or computer crashes.
- Keeping everything available at all times. As our software is cloud-based, you can access your data from anywhere you have an internet connection. This means you can send pro forma invoices while still on site, or approve staff holidays from an email on the train. This keeps your productivity going, with you firmly in control at all times.
- Helping you file tax returns. Not meeting compliance deadlines or not understanding obligations is one of the main worries of small businesses taking on their own bookkeeping. KashFlow links directly to HM Revenue and Customs, so you can get your data to the right place and right on time.
- Keeping everything, from issuing invoices to filing your tax returns, simple and removing all the jargon. By keeping your accounts easy to understand and manage, you’re focusing on what you want to do. As Sion said at Small Business Advice Week’s London event, “I don’t know an SME that set their business up to become an expert in accounting and finance. They set their business up because they love what they do, they’ve got a great idea and they want to liberate that.”
Click here to learn more about Small Business Advice Week and how you can get involved: http://www.smallbusinessadviceweek.co.uk/
You can also hear more from Sion Lewis in the below video:
Want more advice on encouraging growth and productivity in a small business? Leave your questions and comments below and we’ll get back to you with tips and advice.
No head for numbers? No problem. KashFlow keeps account under your control with easy-to-use and no-nonsense software. See what it’s like with a free trial, or request a demo by calling 0344 815 5779.