New research illustrates challenges faced by UK SMEs

A major poll from the Forum of Private Business offers insight into the challenges faced by UK SMEs.

Research published by the Forum of Private Business has indicated that the growth of UK’s small and medium-sized enterprises (SMEs) is stifled by the growing costs of doing business.

According to the poll answered by 4000 UK SMEs, more than half (51%) have experienced significant problems with late payment from big businesses, and 46% feel powerless to negotiate supplier terms.

Illustrating the lack of trust between SMEs and big businesses, the majority of those polled (52%) said that in the face of supply chain abuse from big businesses they would be forced to broaden their client base to minimise any future disruption to their cash flow.

SMEs face challenges from bad business practices

Phil Orford, Chief Executive of the Forum of Private Business said: “SMEs are already unfairly disadvantaged by rising costs and red tape. They are held back from growing by bad business practices.”

“Our latest poll confirms that the supply chain is fit to burst with hurdles and roadblocks that discriminate against small firms.”

He added: “Big business has all the aces, and it is time for affirmative action from the next Government to crack down further on this ethical deficit that threatens to break the backbone of British business – small businesses.”

Utilities companies (79%) and banks (69%) were highlighted as the least likely to take responsibility for their actions.

SMEs are not weighed down by political issues

In contrast, Jean Pousson, Lead Finance Course Leader for the IoD’s Chartered Director training programme said: “SMEs may not have a size advantage but they can compete in so many other ways that big corporations cannot. Entrepreneurs are not weighed down by politics or numerous other legacy issues.”

He added: “They should set their own strategic agenda and drive their businesses forward without fear of bigger competitors.”

SMEs often rely on third parties to provide good customer service

Lawrence Jones MBE, digital entrepreneur and founder & CEO of Manchester-based internet hosting firm UKFast, spoke about the difficulties his company faced: “We were relying on much bigger companies to provide us with a service, and the customer service and standards we wanted just weren’t there. It can be really frustrating as an SME when a third party’s performance lets you down, because it can have the knock on effect of letting your own customers down too.”

On overcoming these challenges he said: “We’ve gotten into a habit of trying to own the primary source of everything we do, so that’s been our way of overcoming it really. We cut ties with some of the big businesses we were relying on and took ownership over the problem ourselves.”

“It might sound like a risk, but it’s one that’s paid off.”

In response to this new research, the Forum of Private Business has launched a Business Ethics Pledge, which calls on big business to commit to a 5 point plan to protect and promote SMEs, ahead of the general election.