The Top SME Business Challenges of 2024

Contents:

• SMEs and their Importance for the UK Economy
• The Challenges that SMEs Face in 2024
• Navigating the Challenges of Rising Costs, Bills and Staff Shortages of SMEs
• What’s next for UK SMEs?
• Why Focusing on your Sales Engine is Critical for Success in 2024

SMEs and their Importance for the UK Economy

An SME (small and medium-sized enterprise) is an organisation that has fewer than 249 registered employees and a turnover of less than £43 million. As we all know, SMEs (small and medium-sized enterprises) play an important role in the UK’s economy. With an estimated 5.6 million SMEs in the UK (over 99% of the business population, they are the beating heart of UK businesses. They are responsible for creating employment opportunities, economic growth and social development, but face many challenges every day.

The Challenges that SMEs Face in 2024

With growth on the horizon in 2024, mobile network company ‘3’ report that SMEs are expected to hit a year-on-year revenue growth of 15%, bringing the overall SME turnover from £2trillion (tn) in 2023 to an expected £2.3tn in 2024. However, despite over two fifths of SME business leaders feeling optimistic about their business prospects there is still cause for concern from macro-economic pressures that business leaders will have to contend with such as national skills shortage across many sectors.

Consumer Numbers Down due to Cost-of-Living Crisis

Research carried out by bank ANNA Money showed that more than half  (59%) of SME owners intend to work on Christmas Day. As a significant proportion of small businesses in the UK were at risk of closure, and consumers continued to feel the effects of a cost-of-living crisis, it is no wonder that 45% of SME owners planned to take just three days off work between 22 December and 1 January 2024.

Many businesses in 2023 were left in poor shape as they entered the year on the back of the cost-of-living crisis, with estimated turnover set to be down 35 percent year-on-year, and some SME leaders considering the possibility of closure. To combat the cost-of-living impact, many businesses increased prices of their products and services where others reduced the size of their workforces.

Simply Business reports that 43% of SME business owners are worried about their sales and customer numbers, with the rising cost of living putting pressure on SMEs to increase employee salaries and absorb cost increases to remain competitive.

Navigating the Challenges of Rising Costs, Bills, Running Costs and Staff Shortages for SMEs

Heading into 2024, SME owners say that they feel rising costs will be their single biggest challenge, with the energy price cap set to increase by 5% on the previous quarter from 1 January to 31 March 2024.

A global survey carried out by Peninsula Group reveals that rising costs are the biggest concern for 84.2% of all businesses, while staffing continues to be a big issue with labour shortages in second highest at 45.6% and retention in third place at 41.5%.

When 79,000 SMEs were asked their biggest challenge when it comes to staffing, even though there were no stand-out answers to the question, each answer that came back had a financial element linked to it. Recruitment at 29.5%, pay increase requests at 22.6% and cost of living at 17.8% were among the biggest challenges employers in the UK face when it comes to staffing. With the cost of living being so high, employees are worried that their monthly salary won’t cover their bills.

However, it’s not all doom and gloom, it can be said that SME owners are feeling more about optimistic about 2024 than they were 2023 with 18.8% of UK and Ireland’s SMEs listing survival as their top goal, compared to 38.4% and 34.7% respectively in 2023.

What’s next for UK SMEs?

The UK has recognised the importance of SMEs as being key drivers for economic growth and job creation. There have been a few initiatives aimed at supporting SMEs and helping them to navigate the challenges they may face throughout 2024.

One of the most notable steps taken by the UK government has been the creation of funding programmes that are designed to provide SMEs with access to affordable financing. Initiatives such as The British Business Bank provides loans and other forms of financing to SMEs, as well as the Enterprise Finance Guarantee, which offers loan guarantees to SMEs that might not otherwise be able to secure funding.

Why Focusing on your Sales Engine is Critical for Success in 2024

As a SME business leader, you know how important it is to maintain a steady stream of sales, especially during times of economic uncertainty when customers are hesitant to spend, running costs are high and energy bills are through the roof. It’s crucial that you and your team focus on your business’ sales engine to ensure that it’s running smoothly. Without a strong sales rhythm and your selling processes lacking rigour, your business risks losing out to competitors.

However, finding solutions to sales problems isn’t always straightforward. You may need to ask yourself whether your team has the necessary skills and experience to drive growth, whether your current business plans are suitable for current market conditions, and how well-equipped your business is to manage change.

If you relate to the statistics we’ve provided throughout this piece and are struggling to build a top-performing sales engine, it’s time to seek expert help.

At Firestarter, we specialise in helping businesses like yours increase sales. We strengthen your existing team, provide additional resources, and use our expertise to get your sales engine firing on all cylinders. No matter what challenges you’re facing, we’re here to help you sell more and grow your business.