As 2013 comes to an end, attention turns to the year ahead and how life might improve in the coming months. But while people’s personal resolutions are likely to include vows to get fit, read more books, or learn a new language, business owners will be considering ways to make their enterprise more efficient and successful in 2014.
There are reasons for cheer as the New Year dawns. SMEs in every region of Britain expressed greater levels of confidence year-on-year in the last quarter of 2013, according to the Federation of Small Businesses (FSB), and the number of small firms in the UK is at a six-year high, even outpacing big business growth. But there are some practical things you can do to harness these positive signs and make sure that 2014 is a year to remember for your business.
Reduce your energy and fuel costs.
Get a grip on your cashflow.
Win new customers and find new markets.
Hire the best talent.
Think about expansion.
Energy prices have risen dramatically over the past year – research from npower suggests that almost half of small firms say that energy bills account for between 25 and 50 per cent of their business costs. Search switching websites, such as uSwitch for Business or Make It Cheaper, to ensure that you’re on the best energy tariff for your premises. And think about making your workplace more energy efficient by putting in a new water heater, installing a smart meter, or improving insulation. Even using low energy light bulbs and turning off unused electrical equipment can make a big difference to your annual bills. If the cost of petrol is a worry, consider trading in your existing fleet for greener, lower consumption vehicles. The Energy Saving Trust offers SMEs useful advice on how to reduce their transport costs and carbon emissions.
It’s an old adage, but cash really is king to any business. You can measure your profits, but these figures mean very little without good cashflow management. Start the year with a cashflow forecast, looking at the likely receipts and expenditure of the operation over the coming 12 months. Take into account the timing of key payments – to the taxman, rental and rate costs, and suppliers’ bills. The Government offers some useful tips on avoiding cashflow problems. Get yourself in the habit of chasing customers for prompt payment to keep your bank balance looking healthy during the year ahead. And to ensure that you will be paid on time, check new customers to monitor their credit-worthiness.
While the British economy started to show signs of recovery in 2013 and bosses are more optimistic for the future, most small business owners say that they have yet to feel any real growth. But you could take advantage of any lingering sense of caution among the business community and consumers. If companies are still looking for ways to cut costs and improve efficiencies, they may be prepared to change suppliers or revamp their procedures. For the firm that recognises what an industry needs and is quick to provide it, there could be a great opportunity to win new business. And the man on the street is more canny and prepared to shop around as a result of the recent economic downturn, so steal a march on your competitors by offering customers a better deal than your business peers. This year may be the one to innovate and diversify by developing a new product or service to fill a gap in the market, so conduct some research to get an idea of what your clientele really wants and needs.
In line with greater optimism among small firms, many businesses are planning on increasing their headcount in the first three months of the New Year, according to the FSB. Unemployment rates have come down over the last year, but 2.4 million people are still out of work in the UK. While this is bad news for the economy, it gives businesses a large talent pool from which to hire strong recruits. And vast numbers of younger people, in particular, are on the look-out for jobs – they could bring innovative thinking and vitality to small companies, and grow with you and your business. SMEs should take advantage of Government initiatives to help with hiring. The National Apprenticeship Service offers businesses with fewer than 250 employees £1,500 grants to take on their first apprentice, for example.
If you’ve been experiencing consistent, bottom-line profit and growth for the last few years, you could think about making your operation bigger either by opening another location or even buying up another company. But this is not a decision to be taken lightly – it takes thorough research of trends and markets; you need to find the right premises or the right company to purchase; and, of course, there’s always the issue of finding the finance to pay for your expansion plans, something many SMEs still complain is in short supply. It may sound grim, but there could be opportunity in the demise of a rival firm. Business failures are declining, though some sectors remain badly affected. If your competitors are struggling, they’re probably not innovating, which can cause customer dissatisfaction. When rivals go out of business altogether, customers and suppliers will be looking for someone else to fill the gap. Clive Lewis, head of SME issues for the Institute of Chartered Accountants for England and Wales (ICAEW) also points out that there can be value in investing in a failing business, be it getting your hands on its intellectual property, valued members of staff, or its customer base. But it takes industry knowledge to know when something may still have life in it, so take advice and do in-depth background research before even thinking about trying to nurse a sickly patient back to health.
Whatever you decide could take your business to the next level in 2014, real change will require a concrete plan. Write a list of your business goals and put it in a place where you will regularly see it. Chart your progress and acknowledge when you’ve achieved key benchmarks. It’s all too easy to start out with the best of intentions on January 1st, only to forget your plans and promises a few weeks later. Make your resolutions a year-round commitment to create an enterprise that is stronger, healthier and more productive than the one you run today.
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