Can technology help SMEs stay afloat as the economy shrinks?
In the UK and Ireland, cuts to dividend and capital gains tax allowances hit small businesses in the pocket. But technology offers a helping hand.
The past few months have been rife with uncertainty for businesses. Rising inflation means they’re having to make difficult decisions about where spend can be cut and how savings can be made. As a result, business confidence across Europe has hit its lowest since the beginning of the pandemic.
At the same time, government support has provided little immediate relief. In Jeremy Hunt’s Autumn Statement 2023, the Chancellor unveiled a package of measures designed to stimulate the economy as we headed into a recession. For small businesses, the Budget was a mixed bag. Despite targeted support packages and a freeze on business rate multipliers, cuts to dividend and capital gains tax allowances were likely to hit small and midsize businesses in the pocket.
Against this tricky backdrop, it is critical that small businesses work smarter, rather than harder. Technology can offer a helping hand here. With the growth of solutions that help to support innovation with little technical skill, to technology that improves supply chain efficiency or enhances sustainability, small and midsize businesses (SMEs) can unlock their true potential all while staying competitive.
Low code as an enabler of innovation
One of the primary challenges facing small businesses is having the technical skills to keep up with today’s fast evolving technology landscape. Yet, with ongoing labour shortages and an increasing skills gap, finding the right talent to make this possible is no easy feat.
For SMEs, this is even more of profound when competing for talent against larger national and multinational corporations. But with the current economic climate, and a market that favours businesses that are digitally led, it is vital that SMEs find ways to continue to invest in their technical capabilities.
Now, there’s an increasing number of solutions that put these skills into the hands of everyday employees. Low code technology makes it possible for SMEs to develop enterprise applications, automate processes, and design business sites without needing any knowledge of coding. This is made possible through a simplified interface that allows users to visually build applications through drag-and-drop capabilities—such as with the newly-launched SAP Build. By removing the reliance on developers, SMEs can ensure they not only have the tools to stay competitive and innovate, but also reduce costs.
Businesses are already seeing the value of using this technology. NHL Green, the National Hockey League Green initiative, is a prime example of what can be achieved through low code. Using the technology, it was able to develop a sustainability app to help ice hockey teams across the league measure and report on their environmental footprint.
Building smarter supply chains
Since the start of the pandemic, supply chain issues have negatively impacted businesses in several ways, through delays in production of goods and the delivery of services, to a decrease in revenues, and a loss of customers. According to the Institute for Government, labour shortages, Brexit trade barriers, global supply problems and panic buying are all contributing to supply chain disruptions in the UK.
While businesses have previously prioritised costs, speed, and convenience when selecting suppliers, building factories, and deciding how much stock to keep on hand, such an approach doesn’t hold up as well in the current economic climate. Now, it’s essential that businesses, particularly SMEs, can improve their contingency planning to offset disruption. Ingraining this resilience ultimately helps them to account for rising costs and better manage relationships with suppliers in the future.
Implementing solutions that enhance traceability along the supply chain is key to giving SMEs the ability to adjust their business models and plan ahead. Through this technology, SMEs can predict demand, receive real-time updates and deliver steady availability of goods—all while meeting regulatory compliance. At the same time, this enables them to review where efficiencies can be made and to analyse the value of being involved in a global supply network versus a local one. Through this, SMEs can ensure they’re prepared for any future risks that may lead to revenue loss, while also doing this in a cost-effective and competitive way.
Winning customers over with sustainability
For SMEs to stay competitive during this period of economic uncertainty, it’s essential that they secure customer loyalty, particularly when they’re being more selective about what they spend their money on and who with.
Consumers are increasingly purpose-driven, which has seen sustainability become a top priority when it comes to making purchasing decisions. In fact, EY’s Future Consumer Index found that 24% of British consumers are primarily driven by putting ‘planet first’ when buying products. Therefore, SMEs have a lot to gain when they embed sustainability into their business models.
Increasingly, consumers pay close attention to the sustainability credentials of businesses and are more aware of how and where a product has been made. The use of raw materials, carbon emissions, packaging and delivery are becoming top of mind when choosing what products to buy. As SAP Insights research shows, consumers are increasingly placing more importance on sustainable sourcing. As such, responsible businesses not only attract more customers but drive financial success.
SMEs can become more sustainable by using technology that allows them to take a ‘sustainability by design’ approach, helping to make circularity an integral part of their business models. Through solutions that provide visibility of material flows, businesses can track their lifecycle from source to market. In turn, this promotes improved decision making and allows for a more targeted approach across the business value chain as leaders can embed practices from the outset to reduce waste and pollution, minimise emissions and promote a circular economy.
Paving the way to business resilience
SMEs are facing more challenging times than ever. With no clear end in sight to the current economic crisis and a looming recession, many are struggling to stay afloat. For SMEs to manage this uncertainty and build confidence, a change in tack is needed.
Technology is providing SMEs with the tools to navigate this period, while also building business resilience for the future. Through solutions that allow them to develop their own applications without the need for a developer, to ones that help to establish smarter supply chains and integrate sustainability into day-to-day practices, SMEs are able to drive down costs, plan for the future, meet customer needs and ensure they stay competitive.