TIME is money, particularly when you are running a small business. Just one error or unexpected issue can cost you a whole day’s turnover, and these losses quickly add up over time. With inflation at a four-year high and wage growth stagnating, no SME owner can afford to be operating at anything less than optimal efficiency.
Here we’ve outlined five things that SMEs can do to boost productivity.
- Change up your financing systems
Every SME has a credit line of some kind – whether it is an overdraft facility, a credit card or a business loan. However, these options are not always the most appropriate for a small business. Credit cards and overdrafts are great to have in an emergency, but they can come with exorbitant interest rates. And business loans are getting harder and harder to come by, thanks to Brexit uncertainty and a risk-averse attitude among banks.
But UK-based P2P lenders are increasingly looking for SME borrowers to meet lender demand. There is currently a big imbalance between borrowers and lenders in the UK P2P sector, which means that business loans are available at much more favourable rates. Furthermore, since P2P platforms are alternative lenders, they can act quickly to let you know if your company is eligible for a loan or not.
- Increase investment in your business
This is the quickest way to improve productivity and ensure the future of your business – but it’s not easy. However, SME owners are starting to come around to the notion that investment is vital, regardless of the economic climate.
“Our own recent research found that more than four in ten company directors are expecting to grow their businesses in 2017,” says Paul Marston, managing director of commercial finance at RateSetter.
“With competitively priced finance for established SMEs readily available, now may be a good time to consider all the financing options and to choose the one that best suits your particular circumstances.
“Also, do remember that if one potential lender is not willing to advance finance on the right terms, that is not necessarily the end of the story – look beyond your own bank and other traditional lenders if they are not prepared to help.”
Read more: UK SMEs face funding black hole after 2020
- Embrace communicative technology
Poor communication can create misunderstandings and slow down the work day. Fortunately, there is a huge range of communitive or collaborative technologies available to businesses of all sizes, which can help to improve communication among teams.
Slack, GChat and even WhatsApp are great for quick and casual conversations, while workflow and knowledge management systems offer an easy way to keep track of complex projects.
Remember, technology is always changing so it’s worth staying on top of the recent trends and reviewing your software on a regular basis.
- Implement standardised processes
SMEs tend to be really good at the one thing that they do best, but unless that one thing is ‘admin’, back office processes tend to fall by the wayside.
Administration is rarely a priority for SMEs, but it is worth investing some time and money in these processes so that you can streamline your most time-consuming chores (for instance, payroll management, bill payments or invoicing) and get ahead of any potential issues.
For instance, earlier this year a report by supply chain finance provider Crossflow Payments found that late payments from suppliers were costing UK SMEs £266bn, and more than half of SMEs affected by delays said that they had to wait for 10 or more days after the deadline to receive payment.
Many of these late payments could be avoided by reducing the payment deadline (for instance, from 14 days to seven), or implementing late payment processes such as a standard ‘late fee’ in addition to interest charged.
Read more: The SME’s guide to P2P
- Look to wider markets
Brexit does not necessarily have to be bad news for SMEs. The value of the pound has fallen, which has contributed to a bump in UK exports.
SMEs can take advantage of the low pound by targeting overseas markets which may not have been feasible a few years ago. In fact, according to Marston, a recent study estimated that if 110,000 SMEs increased their export activity –– it would add £1.15bn to the UK economy in the first year alone.
This is a great time to look to wider markets for business growth, as you’ll find that you are able to undercut your competitors’ prices and potentially win over new long-term clients.