Given the prominence of globally recognised companies in the UK, it can be easy to forget just how reliant our economy is on small and medium-sized enterprises (SMEs).
According to the Federation for Small Businesses, SMEs accounted for 99.9% of the UK’s working population in 2021 and turned over £1.6 trillion. Not bad given the regular tide of challenges and barriers that businesses have faced over the past few years. Indeed, the potential pitfalls haven’t put aspiring business owners off, with NetSuite’s own research revealing that 14% of current SME business founders started out during the pandemic.
Such numbers are proof that the idea of starting your own business is as attractive as it has always been. But, today especially, entrepreneurs need to be robust, resourceful, patient, forward-thinking, and adaptable to change — not to mention in possession of the competencies, from finance to creativity, needed to keep the business afloat and thriving.
So: what qualities do you need to start a business today? How do you tackle the inevitable challenges? And which tools create a technology platform for success?
The relationship between entrepreneur and their business is symbiotic. As the organisation grows, so the individual needs to grow and hone their skills to sustain that success and identify the next opportunity for progress.
A simple example is in customer experiences, with 56% of SME founders in the same survey, identifying customer service as a skill they’d improved. Similarly high on the list are skills in marketing and communications (49%), and finance and accounting processes (45%).
All these qualities tie directly into the generation of profit for the business and are indicative of the focus that drives rapid growth: exceptional customer experiences and financial acumen.
If many assumed the pandemic prevented entrepreneurs from developing their skillset, given the relative lack of exposure to their customers and the limited business infrastructure available to them, they underestimated the capacity of entrepreneurs to adapt. 55% of founders said they had increased their agility or adaptability, with 57% also citing increased resilience.
It seems that, for those who have started businesses that survived the economic impact of the pandemic, their ability to adjust to unforeseen pressures has given them a great confidence in their ability to run a business.
Of course, despite the evolution of thinking, the challenges facing small or growing businesses will sometimes persist. These are so varied that some, inevitably, will find the chink in the founder’s armour. Introducing specialists to mitigate any founder limitations and attack specific problems is a wise move — whether they are working with the business on a full- or part-time basis.
The most common example is on the financial side of things, with nearly half (45%) of SME founders indicating that they need to improve their financial and accounting skills. Many founders won’t know – or, indeed, have the appetite to learn – the rules and regulations of accounting and tax compliance. Faced with a skills gap, the quick-fire, short-term hire of experts makes financial sense.
As such, NetSuite’s research found that a third (31%) of SMEs have hired part-time accountants or bookkeepers, which will provide them with more manpower and expertise to tackle financial, risk and compliance concerns. Indeed, some SMEs opt for a ‘fractional’ CFO, bringing in executive-level oversight to manage key periods.
By contrast, managers of specialised departments – marketing, sales, finance, and operations – have been taken on full-time by a fifth (20%) of SMEs. Only 10% have taken on part-time equivalents for the same positions, which suggests that most entrepreneurs recognise the need for consistency in management positions while using part-time roles for tactical activities or deliver injections of strategic guidance.
Creativity, drive, expertise, and ambition can be critically important to the growth and success of an SME. And yet, the entrepreneur and their wider team are beholden to the tools that they have at their disposal.
Technology has become ubiquitous, with most information created and stored digitally. Most founders (65%) believe that instant access to their company’s financial health data is critical, and technology is the means of accessing it.
However, while 90% of SME founders can access key business data instantly, the numbers drop rapidly when interrogated on the specifics. Only 57% can readily access sales data, 47% gross profit, 41% operational cashflow, 35% overheads, and just 22% can see staffing data.
It would once have been very difficult to create greater visibility into key business metrics, with the relatively modest cash flow of many SMEs insufficient to license and integrate complex technologies. The cloud has changed that, opening up the opportunity for SMEs to enjoy the instant access and visibility to business information that they could seldom afford previously.
Cloud users are far more capable of automating their key processes and eliminating manual work – 85%, compared to just 37% of non-users. They’re also 50% more likely to expand go-to-market channels effectively, and almost twice as likely to expand internationally.
The gap in adoption, interestingly, appears generational. Just 3% of founders under 24 said that they didn’t use cloud technology, versus increasing numbers that rise to just over half (51%) of those over 55. Circling back to the need to adapt with your business, it’s likely that many older founders would benefit from the technological expertise of their younger peers.
The State of Entrepreneurship
Today’s entrepreneur is facing significant challenges, but by nature they tend to embody the resilience, versatility, and ambition needed to grow and adapt their business.
Looking ahead to 2023, the key will be backing up their confidence and drive with the skills needed to execute key business processes; they need to know when to step back and allow experts to take over business-critical functions in both the short- and long-term; and they need to equip themselves with the technologies to enable both themselves and others.
With the right mindset, team, and tools it is more than achievable for the born entrepreneur to turn their idea into a success story.
This is an article written by Nicky Tozer, EMEA SVP, Oracle NetSuite.