More than half (53%) of the UK’s SMBs confirm that business confidence and optimism is a key component to managing a successful business. According to research released today1 and conducted by Xero, a global leader in small business cloud accounting software, business confidence is the key contributor to business success and economic growth. Developing and maintaining this SMB business confidence is critical to the UK’s economic health.
According to recent research by BIS2, SMBs make up a staggering 99.8% of the British economic engine, generate 47% of revenue and employ 60% of the workforce. The economy’s increased focus on small businesses is driven by an understanding of how this grouping of commercial enterprises make up the backbone to the UK.
Xero surveyed over 1,300 of these SMB owners in the UK to uncover the formula for success. The results reveal that business confidence is one of the most significant contributors to their success, and with this confidence SMBs invest in themselves. These investments, through hiring, generate future success and concurrently for the wider benefit to the economy, growth.
Not all companies make it
Figures from the Office of National Statistics reveal3 that in spite of 58% of UK businesses closing before their 5th birthday, (startups are the most vulnerable, making up 44% of those closures), drop off rates significantly decline over time as businesses learn, become more resilient, adapt to challenges and build confidence.
The confidence meter
So what does the confidence meter look like presently? The findings from the Xero research show that currently 52% of SMBs are positive about the future, with just over half believing that the UK economy will grow in 2016. Over a third (36%) of UK SMBs feel optimistic about the future of business. However, the majority (77%) still have business pain points they’d like resolved, including; managing staff and clients (23%), cashflow management (19%) and having time to work on the business (19%), rather than in the businesses.
And are companies striving or struggling?
Encouragingly for the UK’s future economic outlook, businesses that are striving make up the majority of SMBs surveyed (59%), with a respective (41%) of companies struggling.The key differentiator between these two categories of company is that striving companies are more likely to use tools and technology within their business operations and are more likely to have a strategic approach, with business plans in place. They’re also more likely to have growth ambitions (42%), more positive attitudes and more open to advice.
Top tips from Xero for building business confidence and becoming a striver:
Gary Turner, Xero UK Managing Director, provides his insights into how to lift confidence:
“Small businesses are significant economic drivers, improving their outlook lifts the entire economy. My advice to these businesses is to have a firm grasp on your finances and don’t be afraid to enlist the support of a strong collaborative network: family, advisors and mentors, an accountant or financial advisors. These two elements provide the formula for success.”
1.Enrol great advisors: Instead, enlist the support of a strong, collaborative network: family, advisors and mentors, an accountant or financial advisor
2.Try, try and try again: A positive mindset and a willingness to fail—successful small business owners are more likely to see failure as a good thing, learn from mistakes and want to try again.
3.Know your numbers: It goes without saying: being able to have a tight grasp on your finances is key to business confidence. Managing your finances and cashflow should be a fundamental part of your business strategy, not an afterthought. This will give you the knowledge you need to keep your company running and help it to grow when the time is right.