So, it’s official. There are more businesses in Britain now than ever before. Who would have thought that a prolonged economic downturn, youth unemployment and high levels of redundancy would fuel a British business boom? But so it seems, if recent research is to be believed.
Business numbers reached a previous peak in 2008 just as the banking crisis was taking hold, but this record was beaten in March this year, according to the Office of National Statistics (ONS), when 2.17 million companies registered to pay VAT or PAYE, up 18,000 on the year before. Next came evidence of a burst of new businesses, as StartUp Britain, a national campaign to inspire entrepreneurship, announced that its analysis of Companies House data indicated that more than 400,000 new firms have been logged with the company register so far in 2013, compared with about 485,000 in the entire year before. This puts new enterprises on track to exceed the half million mark for the first time ever this year.
Some may find such positive news surprising, but in many respects it makes sense that more people are seeing the merit in being their own boss in the current climate. Consider all of those bright young things who’ve graduated from university into one of the worst labour markets the country has ever seen. With more than one in five 16 to 24-year olds unemployed in Britain between May and July this year, according to analysis of government figures by the House of Commons library, is it any wonder that young people are looking to create their own career opportunities? Then there are the so-called reluctant entrepreneurs, the people who’ve been made redundant, possibly with a pay-off, and who’ve decided to go it alone. The Global Entrepreneurship Monitor for 2012 calculates that 18 per cent of the UK’s businesses fall into this ‘necessity-driven’ category.
But a very striking finding from the ONS research is the role that technology is playing in the current flush of businesses in Britain. Technical, scientific and professional companies have overtaken wholesale and retail firms to become the most numerous industry groups in the UK. Lightning-fast developments in technology are bringing new digital-based businesses into being every day and the go-go nature of this sector is seeing many small firms mushroom quickly into sizeable and serious contenders in a very short period of time.
This seismic shift in the UK economy is reflected in a five-day event taking place from October 14 to 18 called Tech4StartUp Britain. Via a series of free events, new and growing businesses will be taught a variety of skills, including how to make the most of mobile technology and e-commerce, the best routes to growth capital, and how to use the cloud to good effect.
Here at Boost Capital, we find this growth in rapidly expanding, tech-based firms very exciting. But companies with their foot on the accelerator should also be aware of the danger of creating financial and structural instability if they fail to plan ahead and monitor their progress. The professional services giant EY has used its experience with enterprises over the years to identify six core business areas that it believes high potential companies should focus on to ensure both stable and rapid growth. If your business has the potential to grow quickly, consider the following:
- Managing finance. Obviously, a well-structured business plan is of vital importance. This should be up-to-date, along with analysis of any capital requirements of the company. Consider your business goals and what your funding options may be. And don’t just think about today. You should have a forecasting model in place to give you an idea of what your cash needs may be in the medium and longer term, too.
- Customer recruitment and management. A successful company knows its customers’ needs and how to meet them, but an exceptional one goes a step further and can predict the kind of goods or services that will make it the firm that customers want to do business with in the future. This level of insight involves close monitoring of customer satisfaction and opinion, as well as identifying and exploiting new market opportunities.
- People recruitment and retention. Human resources are essential to any business, but are all too often a low priority for smaller firms who lack dedicated HR staff. Finding, hiring and retaining good people, will enable you to grow and innovate. Think about the incentives you offer, and consider succession planning, even if a business is young. You need to know who the next generation of leaders may be and recruit them if they aren’t already in the workforce.
- Transactions and alliances. Would it be of benefit to your organisation and its customers if you were to build business networks to unlock new opportunities? There can also be potential in identifying possible acquisition targets or consolidation options early on.
- Operational effectiveness. Constantly review your structure, operations and supply chain to ensure your company is running as efficiently as possible. The systems that you have in place should be scalable and robust enough to be able to support rapid growth when it occurs.
- Managing risk. Successful businesses are always on the alert for potential threats to their operation, be that from within the organisation, from competitors, or due to broader environmental, social or industry changes. Risk analysis should be a part of the everyday management process, with those at the top of the business primed and ready to spot the early signs of potential disruption.
That Britain boasts six times the businesses it did at the beginning of the 70s can only be a good thing. These companies are creating new jobs and wealth for employees and founders alike, and some firms will go on to be the big businesses of tomorrow. And it is technology that is proving to be a major catalyst for this recent change in the British business landscape. Today, we are shifting from being a nation of shopkeepers to a web of wired-up enterprises.
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