2018 is set to be a year of continued challenges for small businesses and changes in practices should be in store for many of you. Here we set about the main opportunities and threats for your small business.
The budget was relatively well received and growth is on the horizon for UK SME’s. Global growth is forecast to be better than expected, which should have a knock on effect for UK businesses.
November’s autumn budget saw an investment of £13bn in funding to The British Business Bank and an effort to address the lack of R&D in businesses. There will also be efforts to address the shortage of STEM skills and a national retraining program focused on digital skills and construction.
From April, business rates will rise in line with the lower Consumer prices Index (CPI) level of inflation, not the Retail Price Index (RPI). This should help businesses cope with rate rises, a move worth £3.9bn to UK businesses over the next 5 years, according to Chancellor Philip Hammond.
The budget looked at 5 main areas for focus:
- Ideas: Raise R&D investment to 2.4% of GDP by increasing incentives for businesses.
- People: Increase investment in technical skills including an additional £406m to address the shortage of STEM skills (science, technology, engineering and maths). Also investment in retraining. The idea is to provide better jobs and greater earning power for all.
- Infrastructure: some significant upgrades to infrastructure – increasing the National Productivity Investment Fund to £31bn, supporting electric vehicles through developing the charging infrastructure, and building up the digital infrastructure for “4IR”.
- Business Environment: Schemes to increase productivity – reviewing the lack of productivity in small and medium firms and working with businesses in “Sector Deals”.
- Places: Focus on building more prosperous industries that build on local strengths. Focus on intra-city transport. £42m to pilot a “Teacher Development Premium” that will give £1000 to teachers in underperforming schools to be used on training.
Greater economic uncertainty
Uncertainty in the market place are causing businesses some anxiety – and it’ not just down to Brexit. Growth in credit card debt and personal loans outstrips growth in earning by nearly 5 times, according to the Bank of England. Over leveraged consumers and companies may lead to a slowdown in spending and investment.
An increase in the living wage could also put some strain on smaller businesses and lead to difficulties in recruiting new talent.
Prepare for GDPR
Coming into effect on the 25th of May, GDPR will mean that businesses of all shapes and sizes are going to fundamentally change how they operate. See our 2017 article for more information about how and why it is being implemented, but in a nutshell it represents tougher fines and stricter regulation for data keeping.
Don’t dismiss GDPR as being irrelevant for your business – any business that processes personal data of EU citizens is subject to the regulation. That includes customers, suppliers, partners and employees.
The importance of implementing proper data control measures is particularly important with cyber-crime in the increase. 875,000 SME’s were affected by cyber security breaches in 2017, yet almost half plan to spend less than £1000 a year on cyber security. It is worth researching the risk to your business and seeing whether insurance against cyber-crime would be a useful option for you.
The growing ‘Gig Economy’
More than a quarter of UK SME’s now rely on ‘gig economy’ workers – workers with one or more short term contracts or doing freelance work. Instead of working 9-5 for a single employer, they are taking the opportunity to make earning money more relaxed and enjoyable. This may be a signal for businesses to offer increased flexibility to employees.
However the gig economy represents an opportunity for small businesses in the sense that flexible working works both ways and may be a better use of time and money to recruit labour as and when needed. However, businesses should be aware of the lack of security gig economy workers are exposed too, with a quarter of SME decision makers acknowledging that the work can be exploitative.
Get to grips with Blockchain
It’s becoming increasingly important for businesses – no matter their size or sector – to stay up to date with recent technological advances. There are many new tech buzzwords that you should become familiar with in 2018 –for example big data, 4IR and the IOT.
One of the most important of these advances is Blockchain. Blockchain is an online, distributed ledger that has numerous potential applications for small businesses. For more information about Blockchain and IOT in the insurance world, see here.
With the new risks emerging in the marketplace, brokers will be crucial to your business in helping you navigate the challenges of 2018. A good broker will seek to understand SME clients and their business needs and support them by making sure they have the correct cover to protect them against the emerging risks in the marketplace.
If you need advice or a quotation from a trusted broker, call us on 01246 570 600.