It’s a challenging time for businesses of all sizes, but the past three years created storms that are particularly hard for SMEs to weather.
It’s not surprising that more than half of UK SMEs agree rising costs will be a key challenge this year. For businesses dealing with shrinking margins, while a weakened pound is making international purchases more costly, it’s a scary time.
For many businesses this meant initially reigning in any necessary costs, reducing investment in anything deemed as a ‘nice to have’ and focusing on keeping the lights on. However, despite not being out of the woods in terms of economic challenges, this year many SMEs have their eyes on growth.
While some might have been buoyed by the news that the UK has, perhaps surprisingly, narrowly avoided a recession at the end of last year, data shows businesses were already making investments before this news was released. In fact, UK business investment rose by 4.8% in Quarter 4 (Oct to Dec) 2022, coming in at 13.2% above where it was during the same quarter in 2021.
So, where are SMEs putting their cash? As well as predictable spending on IT equipment, machinery, and transport, businesses are also ploughing more funding than ever into technology investments – a trend that isn’t slowing down anytime soon. UK tech investment is set to grow at its fastest rate in over 15 years, both in terms of budget but also headcount.
UK businesses are clearly seeing the real opportunity that technology, in all its various forms, presents to their operations. This may also be bolstered by the fact that making tech investments is potentially more cost-effective now that the Government has made recent changes to R&D tax relief, which sees things like cloud computing and data included in expenditure categories. When it comes to revamping legacy systems and introducing fintechs that offer businesses a smarter, easier, automated way of doing business, investing in technology can increasingly feel like a no brainer.
However, it’s rare that a one size fits all solution exists for businesses. What works for your competitor may not offer the same benefits to your organisation. In a world with so many risk factors, making smart investments that are aligned to your individual business goals is key.
Tom Kiddle, Chief Commercial Officer at innovative money movement solution Equals Money, explains four ways businesses can reap the rewards of smart tech investments:
Can you measure the impact it will have on your business? It doesn’t have to be monetary, but if it gives you efficiency, visibility, or certainty, these can have measurable tangible impacts to your top and bottom line.
Does it tell you something you didn’t know before about your customers, your employees, your suppliers, and their behaviour? What could you do with that information? Often, businesses lack critical insight on their key drivers, and understanding those can open up new opportunities.
Pretty charts and graphs make for good reading, but make sure you’re taking action with your new piece of tech. Setting accountability for action from your latest investment will drive your business to achieve a return on that investment and ensure it doesn’t sit on the shelf.
Adoption, adoption, adoption
Often, the latest tech trend may seem like a great investment to the motivated few, but look more broadly: if your intended internal target for your new tech fails to adopt the new practice, you won’t achieve the return promised. Also, more likely than not, you’ll frustrate both the key supporters of the new product and those you’re imposing it on.
Innovative technology, particularly in the finance space, can transform the way you do business, but avoid being lured in by solutions that don’t align to your individual needs. Good suppliers should always take the time to give an honest appraisal of whether their product is right for you and should leave you feeling empowered to devote time to what matters most – growing your business.