Last year was a year where surprising and unexpected things happened all of which will affect how businesses prepare themselves for the months and years ahead.
We, at the Forum, have got our heads together to bring you the key areas that we believe have been the most memorable and impactful to small businesses in the UK in 2016.
Overall the growth in business for 2016 finished at around 2% with the predictions for this year estimated at 1.2%. The decrease is mainly due to business owners being more careful following the Brexit vote.
The number of businesses within the South of England is higher than anywhere else within the UK. SMEs account for at least 99% of the businesses in every main industry sector in the South and will remain the fastest growing region. But its pace of expansion could slow significantly from around 3% in 2015 to around 1.7% in 2017. Other regions will see more modest growth in 2017, predicted to be closer to 1%.
The importance of small businesses
Small businesses are vital to the UK economy and here are some key statistics from last year to support this.
- Over 99.9% of businesses are small or medium sized employing 0-249 people
- The combined annual turnover of SMEs was £1.8 trillion which amounts to 47% of all private sector turn over within the UK
- There was a record 5.5 million private sector businesses within the UK, which was an increase of 97,000 since 2015 and a 2 million uplift since 2000
- 3 million (96%) businesses were micro-businesses employing 0-9 people. Micro businesses accounted for 32% of employment and 19% of turnover
- 20% of SMEs are female led, and in October 2015 it was announced that 26% of FTSE100 board members were female.
The 24rd June 2016 was a huge turning point for the UK as the nation decided to leave the European Union by 53.4% to 46.6%. Britain now has a new Prime Minister, Theresa May, who has said that “Brexit means Brexit” and that the UK cannot possibly remain within the EU single market.
What about the economy?
The UK economy appears to have weathered the shock of ‘Vote Leave’ although the value of the pound remains near a 30 year low. However share prices have recovered as it appears that British-based businesses are trading higher than before the referendum. The Bank of England cut interest rates from 0.5% to 0.25% - a record low and the first cut since 2009.
It is still not clear what the country’s path of leaving the EU will actually means for everyone.
Cyber security – the critical issue
Historians will look back over the last twelve months as the year that cyber security moved from being an important issue to a critical one. In Britain, The Chancellor of the Exchequer, Phillip Hammond, unveiled a new £1.9bn strategy focusing on cyber security to ensure that not only are we protected against cyber risk but that we can “retaliate in kind” against any digital attack on national infrastructure – like the electricity grid or traffic control systems.
In the small business arena, two out of three firms have been victims of cybercrime in the previous two years and the financial costs and losses are disproportionately bigger than larger firms.
The learnings are huge and significant, specifically:
- The internet is vulnerable. 2016 was the year that saw millions of user account details stolen from brands such as Yahoo!, LinkedIn and Twitter. Even these key players aren’t immune to cyber risk and threats. Unfortunately, the risk to business survival is higher the smaller the company is
- The key message for small businesses is to assess your security and upgrade where necessary
- The rise of ransomware is frightening. The analyst firm Gartner reported that $209 million was extracted through ransomware attacks compared with $24m the previous year – a staggering increase of 11.4% in one single year!
- The rise of finger print and voice recognition is now seen as a critical way of reducing fraud. The time of just logging in with a username and password could well be coming to an end.
Cybercrime could affect anyone and any business. 2017 has already seen cyber security being taken very seriously with the opening of a new National Cyber Security Centre to protect the UK, Government and the economy against cyber attacks.
The age of the millennials
The Millennial generation (those born between 1980 and 2000) are the largest generation in history and the amount of impact they are having on the online market place is staggering. They will be holding the purse strings for decades to come and so if you’re not already thinking about how to specifically target and attract this group to your product or offering then now is the perfect time to get started. Include them in your marketing plan and allocate the necessary budget to get these millennials to sit up and take notice.
Mobile friendly websites
The mobile market is massive, so much so, the ratio of mobile to desk tops was officially passed back in 2014.
Over the last year, the number of mobile-friendly websites continued to skyrocket. Mobile usability is coming into focus as a hot topic and it is vital that small businesses don’t miss out on this expanding opportunity. If you haven’t already done so, make sure your website can be accessed easily from a mobile device and that individuals can shop and surf the internet with ease.
Online shopping is huge and is growing all the time. The benefits of quickly and easily being able to click on a few buttons to then have your purchase arrive the next day is an attractive option for any consumer.
Businesses are jumping on the back of this e-commerce boom realising the huge benefits of selling through this channel. What’s encouraging is that 2016 saw the process of selling online become a relatively straightforward option for all small businesses enabling millions of companies to sell their wares across the world. It’s now easier than ever to sell to a larger, growing online market securely using encryption services that are readily available.
The rise of social media
Social media continues to grow at an alarming rate. Facebook is by the far the best used of all social media and is ranked number 1 with 1.7 billion users as at September 2016.
The following six listed social networks would be unlikely to be used by small businesses but are worthy of mentioning and include WhatsApp, FB messenger, QQ, WeChat, QZone and Tumblr.
Instagram then comes next on the list rated 8th, Twitter is 9th and LinkedIn is towards the bottom of the list rated 17th.
From these figures, it is obvious that Facebook is crushing the social competition and is emerging as the leader of the pack.
To take advantage of the value of social media, it is advisable for small businesses to have a social media strategy and to engage in social activity that suits their business and market place.
These are just a few highlights from 2016 – a year that saw the UK leave the European Union. Our advice is for small businesses to be aware of the changing marketplace, create opportunities and develop a strategic approach for this year and the years to come.
House of Commons library