SME stands for a 'Small and Medium-Sized Enterprise' which are classed as businesses with fewer than 250 employees, and a turnover not exceeding £45 million ...
In January 2022, there were 5.5 million SMEs registered in the UK. A surprising statistic was that only 1.4 million SMEs actually employed anyone. Of all the SMEs, only 35,900 were classed as medium-sized with an employee count greater than 50.
Of course, there are advantages to running an SME rather than simply being self-employed. One of the key benefits is access to government funding and support schemes such as the Enterprise Finance Guarantee which offers loans to SMEs that might otherwise struggle to access finance.
SMEs also benefit from a number of tax breaks and reporting benefits which can help them save money and keep on top of compliance obligations.
Customers and clients often have a more favourable view of SMEs than they do of large corporations, perceiving them as being more trustworthy. This can give them a valuable competitive edge over their larger brethren.
But it's not easy running a successful SME. Here are a few of the important things you need:
- A Thorough Business Plan
SMEs need a well-thought-out business plan. This gives you a roadmap to follow to help you make informed decisions. Any business plan needs objectives, a budget and action plans.
- Adaptability
It is crucial to be adaptable in today's business environment. Remember what happened during the pandemic? Those that didn't adapt, didn't survive. But consumer behaviour changes too, so it's vital to be able to change when necessary. Be open to new ideas and flexible in your approach.
- The Right Marketing Strategy
Marketing is absolutely essential to any business that wants to succeed. You must reach your target audience and communicate the benefits of your product or service. There are so many channels available including social media, newsletters and SEO so choosing the right marketing mix and applying a well-thought-out strategy is important.
- The Best People
The right team can make or break an SME. Surround yourself with talented and ambitious individuals who share your vision and want to help you achieve your goals. This includes everyone from employees to suppliers and your investors.
- Customer Service
The ultimate sign of a thriving SME is the provision of excellent customer service. Ensure your entire team is trained on how best to handle customer queries, and even complaints as this means customers will come back time and time again and give you word of mouth referrals.
- High-Quality Products and Services
And of course, your products and services must be of the highest possible quality. You may not have the budget to compete with larger companies, so a higher quality product or service will stand out from your competition.
I always recommend that aspiring entrepreneurs find an accountant they can trust and work with them to start their SME. There are a number of different business structures available, including limited liability companies, sole proprietorships, partnerships and LLPs. Choosing the right one at the start is vital to your success and your accountant will help you with that.
Being in business for yourself can give you a great sense of job satisfaction, and you will have a lot of freedom to make your own decisions and determine the direction of your business.
But at the same time, it can be challenging, and the risks are high for anyone who takes their eye off the ball. The right structure, the right business plan, the right team around you and a growing order book are what we all seek to achieve.
And with the right advice, you can certainly create a Small and Medium-Sized Enterprise, an SME, to help you reach all of your goals.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.