Top 5 Business Growth Challenges UK SMEs Face

Like every economy, small and medium enterprises (SMEs) are essential for the UK economy and are considered the backbone for its growth. These businesses play a major role in creating jobs, fostering innovation and driving national economic growth. But at the same time, these businesses struggle with sustaining growth due to many uncertainties, including limited resources and evolving customer expectations. These hurdles or challenges can significantly slow down their growth. Read further in the blog to understand more about the importance of SMEs, top business growth challenges faced by these business organisations, and strategies that these SMEs can use to overcome these challenges.

Importance of SMEs to the UK Economy

Small and medium enterprises (SMEs) play an important role in the UK economy. It is very crucial that business leaders and decision makers understand and address challenges and obstacles faced by these small and medium-sized businesses.

Here are a few reasons why SMEs matter for any economy:

SMEs are responsible for generating the majority of the job growth in the UK. These SMEs are established in areas where major corporations are not located, creating jobs for local communities.
SMEs are comparatively faster than large corporations in bringing innovative products and services to the market.
Since these SMEs are responsible for creating a large number of jobs for local communities, they contribute significantly to local economic growth. These businesses support local supply chains, independent service providers, etc.
A robust SEM sector in any economy is responsible for adding diversity and agility to the national economy.

Top Business Growth Challenges Faced by UK SMEs

Now that we understand how important SMEs are to the UK economy, it is essential to understand and address the business growth challenges faced by these SMEs so that they can be tackled in time:

Limited Access to Funding

One of the biggest challenges that small and medium enterprises have to deal with is the limited access to capital and funding. Banks and other financial institutions are not readily available to lend money to these businesses due to multiple reasons, including reservations about the size and risk profile of these businesses. future uncertainty, etc. Such businesses are also sometimes unsure about which source is appropriate for securing finance from. It further makes it challenging for businesses to invest in new equipment, hire employees or expand their operations, etc.

Talent Acquisition and Retention

Hiring the right people for the right job and then retaining them is also a big challenge that SMEs have to deal with. These businesses usually run low on finance and hence, are not always able to compete on salary and benefits with large corporations. They struggle with limited HR resources and recruitment capacity. Additionally, high turnover costs and training demands make it more difficult to manage talent in the organisation.

Cybersecurity Threats

Technology is advancing rapidly, and so are the cyber attacks. These cyber threats and attacks have become digitally advanced, more sophisticated and harder to identify. Small and medium enterprises often fall prey to these cyber threats since, unfortunately, most of these businesses are not financially sound and capable of implementing the required robust security systems to tackle cyber threats. Limited IT resources and awareness add to these threats, posing a significant risk of legal, financial and reputational damage.

Regulatory Compliance

The government of the UK and the industry-specific authorities have implemented multiple laws, rules and regulations for data protection and tax regulations. It is important for businesses to stay aware and be compliant with these complex regulations. It becomes a challenge specifically for small and medium-sized businesses due to these constantly evolving legal requirements, a lack of in-house compliance expertise in these businesses and risks of fines and penalties for non-compliance.

Evolving with Technological Advances

Technology is advancing at an alarming rate, and so is the ongoing requirement for SMEs to learn, adapt, and implement new solutions. Failing to match pace with the pace of technological evolution can leave business processes inefficient and seriously hit competitiveness. It has become a major challenge for small and medium-sized businesses since it becomes overwhelming with too many tools and little corresponding guidance. These SMEs usually don’t have the financial resources to tackle these challenges.

Strategies for SMEs to Overcome Growth Challenges

There are multiple challenges that SMEs have to overcome to survive and outgrow their competitors. Below are some of the strategies that SMEs can use to overcome these growth challenges:

SMEs should leverage AI and technology to increase efficiency, such as chatbots for customer service, cloud-based CRMs, etc.
A strong financial foundation is non-negotiable for these SMEs. Hence, it is important to monitor financial health and performance by creating detailed cash flow forecasts, tracking ROI on marketing and operations, etc.
Workforce drives success for any business. Hence, SMEs should consider offering flexible or hybrid work models to their employees, invest in internal training and career development, etc.
SMEs should utilise the power of strategic sales planning, setting clear targets, defining an ideal customer profile, etc.

Conclusion

Having a clear and robust strategy for growth is essential for small and medium enterprises, especially to tackle and outgrow business growth challenges. From limited access to funding and resources, problems with talent acquisition and retention, to evolving with technological advances, SMEs have to face significant problems. It is important to proactively identify these issues, plan strategically, and take timely action. At Gluu, we help SMEs optimise their operations, streamline all processes and make them ready for digital transformation. IF you’re looking for a reliable partner to assist you with tackling these challenges, contact Gluu today!