When it comes to monitoring social media usage in the workplace, just half (50%) of companies have internet guidelines in place despite new research from A&O IT Group revealing that SME staff are spending up to 57%of their day on popular social media channels.

The national review was investigating the potential long-term impact of overlooking IT support including having adequate internet guidelines in place to reduce the risk of cybercrime that can often lead to technology breakdowns.

Despite a third (30%) of SMEs admitting that they had lost at least one full working day due to technology issues and over two-fifths of them (42%) admitting that have lost income due to IT issues, the research highlighted that over half (54%) of SMEs across the UK don’t have annual IT check-ups that could identify and prevent potential system issues.

The survey from the specialist SME and small business IT support service indicated that Facebook is the biggest draw on time for SME business owners employees, with 33% saying their staff accessed it during their working day, compared to 14 per cent for Twitter and 10 per cent Instagram.

The findings follow the launch of A&O IT’s specialist SME and small business IT support service in the UK market. The new technology enables SMEs to tap into the same levels of expertise and experience enjoyed by big businesses across the globe. This includes a complete managed IT service through to crisis recovery, cyber security, remote data back-up, annual IT reviews, hardware management and cloud services.

(Source: A&O IT Group)

Business of all shapes and sizes need to keep a strong eye on their financial situation. But this is especially true for small to medium-sized enterprises, lacking the resources of their larger brothers and sisters. Wink Bingo below lists 5 quick money-saving tips for Finance Monthly.

The essential fragility of the SME means that - unlike larger companies - should something go wrong they could find themselves in deep trouble.

To that end, it is essential that SMEs manage costs at all times, always being on the lookout for ways to save cash. Here are five ways you can do just that.

Control staff costs

If a member of staff leaves the company, ask yourself if they actually need replacing. You might find their workload can be comfortably accommodated by the remaining members of the team -  perhaps those looking to take their career to the next level by getting more involved in the company.

If you definitely do need to hire a new member of staff, you could consider recruiting someone part-time or on an informal basis instead. And rather than pay a recruitment company to source candidates for you, why not do it yourself, or assign the task to a member of the team? It’ll save you money and give you greater ownership over the hiring process.

Hive off suppliers you don’t need

Paying external suppliers for goods and services is bread and butter for many companies. But it is worth reviewing your outgoings - are there any supplier services that you either don’t use, or could move in-house instead?

For example: if your senior management team uses an external travel management company to arrange travel for them, consider whether you really need to pay for this expense. Booking trains and hotels is something anyone can do - and with the internet and the number of travel-booking apps available, this is not particularly time-consuming either.

Encourage your employees to save money too

It pays to be smart with money at work. While you might be looking for ways to tighten the purse strings, is your staff doing the same? Encouraging them to help find ways in which the company can save cash, however small, is a no-brainer.

If you’re big enough, you could organise a workplace investment scheme or offer your employees suggestions on how they could save money – such as cycling to work in order to cut commuting costs.

Remember that employees have an appetite for saving. This infographic by Wink Bingo demonstrates that even if they win a fairly modest £50 playing online casino games, most people would choose to stick it in the bank rather than spend it. So, if your employees are keeping an eye on their own wallets, it’s likely that they’ll also keep an eye on yours, too.

Hire staff as and when you need them

Whatever your industry, you will know of certain areas of your company that are extremely busy at some times and extremely light at others. This could be anything from picking deliveries, to data entry, to website maintenance.

To better manage the ebb and flow of demand for these jobs and tasks, why not use freelancers when you really need lots of staff?  The US and UK are freelancing hotspots, with millions of people in both countries now working independently, so there’s a vast network of professionals to tap into.

Using freelancers is a cost-effective strategy - it means you only employ people for specific jobs as and when you need them, rather than throughout the whole year.

Maintain healthy cash flow

If you have a healthy pool of cash flowing through your business then you shouldn’t have problems paying bills, staff and suppliers. But if your cash flow is shaky, it could cause problems, and end up costing you money.

To maintain a good cash flow, get a handle on your supplier management by negotiating better payment terms, carrying out regular credit checks and issuing your invoices on time. To raise cash levels, consider putting prices up or run special promotions or discounts to increase sales volumes.

Even when things are running smoothly, it is crucial that small to medium-sized enterprises ensure they always think about costs. After all, when the customers are coming through the door and everything seems fine, it can be all too easy to become complacent.

By managing your costs, shedding non-essential expenses, keeping a firm eye on cash flow and encouraging your employees to be financially responsible, you will be doing all that you can to stay financially buoyant, and in a stronger position to cope should the unexpected happen.

Here, Damon Walford, Chief Development Officer at alternative lending industry pioneers ThinCats, shares his thoughts with Finance Monthly on the merits of alternative finance.

According to Altfi’s latest statistics, the alternative finance industry has originated a total of £8.7billion in loans, and there are currently almost 40,000 companies benefitting from the funding offered by this innovative and fast-growing sector. But why should businesses in need of funding approach such a platform rather than going down the traditional route of a bank loan? There are many answers to this question, but the overarching sentiment from the many and varied businesses that ThinCats has helped over the years is that it offered them a more personal, accessible and human service than they would have received through traditional means.

In discussing the benefits of alternative business funding, it’s important to set the context as to why the sector thrived so soon after emerging. Not long after it came to exist in its current form, we were struck by the financial crisis and most banks effectively pulled up the drawbridge and shut the gates on businesses looking for funding. Naturally, this created a major problem for ambitious SMEs looking to grow, but equally presented a huge opportunity for alternative finance. By offering small businesses a much-needed lifeline, the industry began to establish itself as a worthy alternative and a decade later, thousands of UK SMEs are testament to this.

One major point of difference between an alternative finance platform and a traditional funder is flexibility. For example, a bank’s lending criteria can be governed by a number of factors that don’t necessarily reflect an applicant’s deservedness of a loan; some big lenders take into account how much capital they’ve lent in a particular sector and a business can be turned down if it has reached its designated limit. Such a stringent approach inevitably results in worthy businesses being turned down for loans. Alternative finance platforms, however, aren’t limited by such criteria and can judge each applicant on its merits, on a case-by-case basis, taking a more personal, realistic approach to the transaction.

Alternative business lending also fulfils a large range of loan types from MBOs and growth capital to cashflow lending, across all regions and industries across the board, from the motor trade to renewables, IT, social care and everything in between. It therefore opens avenues for growth, development and expansion that are not recognised by some traditional lenders.

ThinCats are unique in using a network of business finance specialists who work as loan sponsors to help review borrower proposals. A loan sponsor can be a single individual, but more typically consists of several advisors with significant experience in finance, who are there not just to say ‘yes’ or ‘no’ to a business, but to help loan applicants make their case and be confident in their application. They take on the vital task of presenting the funding application accurately and specifically, allowing the business owner to continue running their business whilst providing investors with vital details on the investment opportunity. And by acting as the primary point of contact for the business, borrowers are given a personal touch which doesn’t always exist within the framework of bank business lending.

Furthermore, ThinCats has developed an award-winning, multi-layered, risk assessment model to give UK SMEs more than just a number crunching, ‘computer says no’ experience, whilst also protecting the interests of the lenders.  The credit grading model consists of an in-depth, balanced analysis of a company’s financial health and dynamism, and is complimented by the security grading, determined by the asset to loan ratio.  These scores are combined through multivariate analysis, and then professionally qualified by the credit team, giving all applicants a candid and fair opportunity to access funding.

A number of the worthy businesses that have borrowed via the ThinCats platform have been declined by banks, for one reason or another. Take Jack Norgrove, for example. An experienced member of the building and construction industry, Jack identified the promise in a plumbing and drainage supplier in Kidderminster, and put a proposal together to buy it out. When the bank he was talking to declined the deal due to insufficient security, he went looking elsewhere.

He was put in touch with a business consultant, who took the proposal to ESF Capital, major shareholder in ThinCats and sponsor to the platform, to discuss accessing an alternative business loan. The consultant was able to demonstrate that it was a solid business with a good track record and ESF and ThinCats concurred. The loan was listed on the platform and filled on schedule, allowing Norgrove Building Supplies Ltd to officially purchase the business, and immediately start implementing the development strategy, thereby making the most of a profitable situation in a timely manner.

For many business owners who have borrowed through alternative finance, it’s the very different nature of the platforms which offers the benefit and acts as the draw. Alternative lending firms are more independent than high-street lenders and offer more transparency for borrowers and lenders. On such a platform, if your business appeals to investors, you will be able to raise a loan and have it fulfilled. For many borrowing businesses and lenders, this ability to access investors directly is one of the main appealing factors; the social element of being able to witness investors compete on the platform to back your business with a loan, and become an advocate of your brand, and potentially a loyal customer.

A major benefit for businesses looking to borrow is speed. These platforms are generally much smaller organisations than big corporates, so naturally there can be a more hands-on approach from the outset when it comes to dealing with potential borrowers. With a tighter business framework, there are also less hoops for applicants to jump through, and complicated and unnecessary covenants and conditions are reduced. The time taken from a business first contacting ThinCats with an application to drawing down of the loan is a matter of weeks rather than months, enabling company owners to make the most of business opportunities as they arise.

Alongside these benefits, the alternative finance industry is able to offer competitive interest rates as well as flexible terms when it comes to loans, such as a choice of security terms, a range of repayment options or no early repayment charges, which may not be the case with some traditional loan providers.

ThinCats is one of the pioneers of the industry, and has recently had a record month, setting the scene for a record quarter; with an incredibly diverse pipeline of loans in prospect, it shows that the alternative lending industry is incredibly buoyant, and provides opportunities for SMEs and investors across the board.

The developments and investment that have come with strong institutional backing behind the industry has meant that early niggles have been ironed out, and the sheer volume of loans, investors and borrowers demonstrates the strength of the sector. Borrowing businesses can now have peace of mind that the major players offer an alternative funding package that is worth considering, even before approaching a traditional lender.

Britain’s 5.3^[2] million strong army of sole traders and micro businesses estimate they’re spending the equivalent of 2.5 million working days collectively each month on managing their finances, a figure which could be a serious underestimation according to KashFlow.

KashFlow commissioned a study among sole traders and owners of businesses with less than ten employees, to get a better understanding of the pressures they feel when it comes to things like balancing their books, managing cashflow and doing their annual tax return. The study uncovered some surprising findings. Despite almost a third (32%) admitting that managing their finances leaves them feeling stressed, only 6% rated their finance management abilities as ‘not good’ – with 87% rating themselves either ‘really good’ or ‘not bad’ at doing things like keeping on top of cashflow, managing payments and staying compliant.

As part of the study, KashFlow considered the list of jobs that are part of financial management for sole traders and micro businesses, all of which they say they’re currently fitting into less than half a day a month. These include:

• Creating and issuing invoices to customers
• Chasing late payments
• Recording all income and expenditure
• Reviewing corporation tax liability to ensure money is put aside
• Reviewing payments to owners and directors (including shareholders)
• Paying staff salaries
• Paying suppliers (including rent) and ensuring they’re not paid twice
• Managing expenses (paying staff and ensuring expenses are billed to customers)
• Managing staff pensions
• Reviewing prices against competitors to ensure the company is competitive
• Costing new jobs and creating quotes (or prices and estimates) based on time it will take to do the job and/or supplier costs
• Profit forecasting - Ensuring that the company will make a profit in the short and long term and making adjustments to the business where there is a discrepancy
• Cashflow forecasting – Ensuring that the company can pay invoices when they full due
• Reviewing investment for growth opportunities and calculating the opportunities and risks
• Regularly reviewing supplier costs to ensure value for money
• Reviewing capital investment needs and funding

As a business management tool, KashFlow makes all these tasks quicker and easier, with the exception of competitor price analysis and reviewing supplier costs.

Oliver Shaw, CEO of KashFlow said of the findings: “It’s really encouraging to see that many of those we surveyed feel confident and in control when it comes to their business finances, especially as we know it’s not their favourite thing to do. However, the figures suggest that many could be underestimating how long they actually spend each month, or perhaps overlooking important finance management tasks which will help them stay in better control of their business in the long term. We know that they would far rather be earning money doing what they love than staring at a spreadsheet. It’s one of the reasons why software like ours exists; to make the time intensive and tricky things easier for people.”

KashFlow say the impact of non- compliance on small firms and sole traders should not be underestimated, with penalties being enforced for late payment and filing, or mistakes with a broad range of things including tax returns, statutory accounts to Companies House, PAYE, P11D and National Insurance. These can have serious consequences for micro businesses, a sentiment echoed by Roy Maugham, Tax Partner at UHY Hacker Young who recently said, “There is increasing pressure on small and mid-sized businesses to spend their time and money on systems to ensure that tax affairs are accurate and up to date. Without adequate care, small businesses are at risk of being pulled up over minor mistakes or small disparities, which could incur disproportionately heavy fines and penalties.”

Oliver Shaw concluded: “Sole traders and micro businesses make a huge contribution to our economy, and our research shows they’re a really passionate and motivated group, who love being their own boss. Staying on top of their finances is vital for them to be compliant and ultimately, stay afloat, so they should consider tools that allow them to do it in a smarter and more efficient way.”

(Source: KashFlow)

[2] https://www.gov.uk/government/statistics/business-population-estimates-2016

Almost half (48%) of SMEs felt that British businesses are missing out on opportunities because of a reluctance to borrow, and 45% believe that the economy is being stifled because they won’t borrow.

Yet, almost a third (27%) of those SMEs are holding back the growth of their own business, due to a ‘fear of funding’, by refusing to take external finance, according to research by Ultimate Finance.

The research, conducted by BDRC Continental on behalf of SME funding partner Ultimate Finance, challenges industry perception that small businesses are not borrowing because of an access issue.

In fact, confidence in securing finance is high; 59% of SMEs were sure they would get the money they needed, if they applied, and 57% felt they had a good understanding of the finance options available to them.

Instead, this bigger issue around the ‘fear of funding’ stems from a belief that external funding results in a loss of independence (47%), that borrowing can cause more worries (44%) and that taking external funding is too risky in the current economic climate (37%).

Ron Robson, CEO of Ultimate Finance, commented: “It’s not good news for the UK economy, if SMEs understand the benefits of borrowing, yet do not seek the funding that could have a positive effect on their operation.

“In many ways it’s not a surprise; years of economic instability which preceded Brexit has led to a general uncertainty on ‘what next’.

“The bigger challenge to tackle is that SMEs have a fear of funding and are not seeking finance when they need it. This is contrary to messages that lenders aren’t lending, which is simply not the case; borrowing figures are down due to demand. This mixed communication is contributing to confusion and takes attention away from educating SMEs about the positive impact borrowing money can have.”

The report by Ultimate Finance also looked at how borrowing can support business growth, and found that on average 27% of SMEs that do borrow, attribute external funding as a key reason for their business growth.

For larger SMEs (with 50-249 employees) this number rose to over a third (35%).

Over a fifth (21%) of businesses that have borrowed recently, also felt that without external funding, they would not be in operation today.

Robson continued: “There is clear evidence that external funding can have a hugely positive impact on an SME.

“As well as the peace of mind that comes with knowing that the basic bills will be covered, the right funding can be used for positive business investment, for example to upgrade machinery, fulfil a large order or negotiate cash-upfront discounts with suppliers, all of which help to lead to growth.

““The funding sector and the government need to come together to help change the negative perceptions around borrowing.

“Only then can we start to instil a sense of confidence in borrowing in SMEs, and support them to grow.”

(Source: Ultimate Finance)

As the UK General Election approaches, all the major political parties have made their traditional bid for votes via the publication of their manifestos. Given the enormous contribution that SMEs make to the UK economy, it’s no surprise that parties of all colours have announced polices that aim to court the good opinion of SMEs.

But what exactly are these policies and, if implemented, what will they mean for SMEs during the next parliament? Steve Noble of Ultimate Finance talks to Finance Monthly.

Taxation:

Given the recent furore over business rate rises, all parties have made promises to alleviate the pressure on SMEs from various taxes. The Conservatives have pledged to increase the personal allowance for income tax to £12,500, and raise the higher rate threshold to £50,000. Labour has promised a full review of business rates, wants to increase corporation tax for large businesses, and bring in a lower small profits rate of corporation tax for SMEs. The Liberal Democrats see cutting business rates as a ‘priority’, and have also vowed to support entrepreneurship with a new scheme that would pay selected entrepreneurs £100 a week for six months to support their living costs.

What will this mean for SMEs? - There’s clearly good news for SMEs if either Labour or the Liberal Democrats win the election. Although the Conservatives haven’t made such explicit promises on business rates and corporation tax, the fact that their rivals are so hot on these issues should ensure that it’s kept near the top of the agenda during the new parliament.

Late Payments

Whatever your political preference, it’s good to see that the issue of late payments, long the bane of SME financial life, is now being taken seriously by the two main political parties. Labour have promised to “declare war” on late payments and will demand that all those bidding for government contracts pay their own suppliers in 30 days. Similarly, the Conservatives will ensure that business that don’t abide by the Prompt Payment Code will lose the right to bid for government contracts. They are also pledging to make one third of all government purchases from SMEs by the end of the next parliament; a promise that, if honoured, would potentially mean billions of extra income for SMEs.

What will this mean for SMEs? - It’s interesting to note both Labour and the Conservatives are planning to lead by example and instil good practice in companies that supply to the government, as well as supporting SMEs through purchasing from them. However, it remains to be seen whether this is the right approach to take. We believe that businesses should work together more effectively on this to ensure late payments are no longer an issue for both larger and smaller businesses, rather than pointing fingers of blame.

Employment

Labour has promised to ban one of the most controversial features of the modern economy: zero hours contracts and would do the same for the unpaid internships which have flourished in recent years. Labour also wants the living wage paid to all employees over 18 and to grant all workers equal rights from “day one”, including temporary staff. The Liberal Democrats have likewise proposed a ban on zero hours contracts and want to ensure rights derived from EU law, such as parental leave, endure post Brexit.

The Conservatives have proposed to double the Immigration Skills Charge to £2000 per year for each non-EU worker employed by a business. They have also vowed to offer a National Insurance holiday for businesses that take on ex-offenders, disabled people, and those with mental health issues.

What will this mean for SMEs? - Whichever party wins the election, rising staff costs are on the horizon, either via the increase in the Immigration Skills Charge or an enforced rise in the living wage. Employee costs are often a challenge for SMEs and these will increase, regardless of whether they have two employees or fifty.

There’s also a momentum growing across all parties to ensure flexible working arrangements are legally binding, with a stamping out of zero-hour contracts and moves to ensure employees are entitled to the same benefits as permanent, full-time employees. This may have an impact on sectors such as hospitality and construction which can tend to have flexible employment arrangements depending on projects and seasonality.

Skills

There’s a lot of talk about skills in each of the party manifestos, which is good news for the SMEs that depend on a pipeline of skilled labour to ensure both growth and competitiveness. The Liberal Democrats want to double the number of businesses that hire apprentices, develop national colleges to deliver high-level vocational skills, and increase advice in schools about entrepreneurship and self-employment. Labour want to create a National Education Service for England, double the number of completed apprenticeships at NVQ level 3 by 2022, and, notably, protect funding to SMEs that hire apprentices. The Conservatives are planning to launch new vocational qualifications called T-levels covering 15 subjects including construction, creative and design, digital, engineering and manufacturing, health and science.

What will this mean for SMEs? - All three parties have declared similar ambitions to invest in apprenticeships and skills, which are welcome pledges as the UK looks towards Brexit and considers its competitiveness.  Labour’s vow to support SMEs that hire apprentices is particularly interesting and it will also be interesting to see how the recently introduced Apprenticeship Levy would be impacted by these initiatives.

In conclusion, it’s clear that all the main parties are trying their best to secure the votes of SME business owners and there’s no doubt that some of the proposed policies will be welcome if they ever make it into law.  However, as ever after an election the real test of the winning party’s commitment to SMEs will come when the new parliament begins and all these promises must become action.

The financial services sector tops the table in deals between large organisations and UK SMEs. Since April 2016, there have been 452 deals, known to have exceeded £6.2bn. This accounts for 41% of the national total volume.

Economic data, released today by national law firm Bond Dickinson, explores mergers and acquisitions, joint ventures and minority stake purchases in UK SMEs from both domestic and international corporates.

Over the last four years, there were 1,864 financial services deals, known to have totalled in excess of £31bn.

Seen against the 7.2% that financial services and insurance contributed to UK GVA in 2016, the intense focus on collaboration with SMEs mirrors the sector's drive to exploit the opportunities presented by fintech.

Across all sectors, between 2013/14 and 2016/17, large organisations are known to have invested over £102bn in 5,447 deals with UK SMEs. This exceeds the £62bn corporates invested in UK research and development between 2013 and 2016*, and represents more than a seventh of the £683bn total UK business investment.

Based on analysis of four tax years of deal data, the findings are detailed in Close Encounters: The power of collaborative innovation.

Ben Butler, Partner at Bond Dickinson, comments: “Partnering with startups has become a key element to the digital transformation strategies which are now of vital importance to the financial services sector’s prospects. Large firms’ ability to innovate can be held back by dependence on legacy systems, while dynamic young SMEs have the advantage of developing from scratch. These partnerships combine the best of agility and scale to deliver improvements for customers and the sector as a whole.

“Despite complex and changing regulation, such as the Open Banking Initiative and PSD2, financial services has faced disruption head-on, embracing the advantages of collaborative innovation and startup incubation. The challenge now is to keep this up and not be distracted by political uncertainty.”

2016/17 fall

Bond Dickinson’s study goes on to reveal that the total number of financial services collaborative deals dropped by 22% in 2016/17.

Deal volume rose from 406 during the 2013/14 tax year, to 426 in 2014/15, to a peak of 580 in 2015/16, before falling to 452 in 2016/17.

However, the financial services sector is slightly more robust than others, as the average dip across all sectors, including energy, insurance, manufacturing and chemicals, real estate, retail and transport was 28%. This is striking considering the possibility of a disproportionate impact of Brexit on financial services.

A move away from M&A

In the majority of sectors, M&A remains the most popular collaboration vehicle between SMEs and large organisations. However, in financial services, minority stake investments made up three quarters (75%) of deals since 2013/14, three times as many as M&As (25%).

Of the 2,409 minority stake purchases conducted between large organisations and UK SMEs between 2013/4 and 2016/7, almost 60% (1,390) involved financial services firms. £14.3bn was invested in these minority stake deals. This mirrors strategic investments in accelerator funds, startup events and incubators, amongst banks in particular, which together create an ecosystem for collaborative innovation.

Ben Butler adds: “The popularity of minority stake purchases, rather than full acquisitions, shows financial services has found an alternative to the traditional model of buying up startups and attempting to integrate them. This is a new way of harnessing the value of long-term relationships with dynamic startups. A wariness of investing in tech entrepreneurs with fast exit plans could well see this turning into a wider trend in other industries.”

(Source: Bond Dickinson)

While self-employment has risen noticeably slower than paid-employment since the beginning of the decade, Canadian small- and medium-sized enterprises (SMEs) have been creating a more significant share of jobs since 2010, finds a new report by CIBC Capital Markets.

Between 2010 and 2016, 42% of new jobs were created by businesses with less than 100 employees, up from 30% between 2000 and 2010.

"Beyond the threshold of five employees, there is a clear positive correlation between size and growth, with larger firms within the SME spectrum seeing progressively stronger growth recently," says Benjamin Tal, Deputy Chief Economist, CIBC, who co-authored the report, Canadian SMEs: Strength Beneath the Surface, with Senior Economist Royce Mendes.

"What's more, the share of larger SMEs has risen to a level not seen in almost a decade," Mr. Tal says, noting the trend is particularly strong west of Quebec. "Each province from Ontario to B.C. has exhibited a growth rate of more than nine% in the number of companies with employees."

In 2016, more than 350,000 businesses were created and just under 300,000 exited, with the entry rate (the ratio of business creation to total businesses) on the decline since 2004 while the exit rate has been more stable, despite the impact of the fall in oil prices a couple of years ago.

"Small business optimism has been grinding higher since bottoming out early last year and appears headed back to levels seen prior to the oil price shock," Mr. Tal says. "With the Canadian economy in recovery mode, the environment for small businesses remains constructive."

And while the World Bank ranks Canada as one of the best places to start a new business due to access to capital and a favourable tax regime, the report highlights several gaps, including access to financing for certain business.

"From companies with high growth rates to those with young owners, some SMEs do face more acute issues finding financing," Mr. Tal says.

The report also highlights that women remain an untapped resource in the SME space.

"Female participation in the workforce has made significant progress over the past few decades, but entrepreneurship remains an area that could see improvement," Mr. Tal says. "Female majority ownership in the SME space represents less than 20% of all businesses, and recent progress has been slow in coming."

Another gap is youth entrepreneurship. Canadians between the ages of 25 and 39 comprise more than 25% of the population, yet represent less than 15% of small business owners and less than 10% of medium-sized business owners.

Canadians aged 50 to 64 years, by comparison, also represent about 25% of the population but this group represents 47% of small business owners and 51% of medium business owners.

"One reason for this discrepancy could be related to their access to financing. Remember that companies with younger owners face much more difficulty when trying to externally fund their business," Mr. Tal says. "It will be important to watch this segment of the population as Canada tries to compete with other countries in the tech landscape, which is more tilted toward younger business owners than other industries."

Canadian SMEs have also been slow to expand revenue sources outside of Canada and North America.

"SME revenue continues to be geographically concentrated in North America, creating risk," Mr. Tal says. "Currently only 10% of SMEs are involved in any sort of exporting at all, and roughly 90% of those companies are sending their wares to the U.S. In the current political environment, it has become a risky proposition to focus solely on the U.S. market."

The report notes that there is room to increase the ratio of Canadian goods and services being exported to Asia and Latin America.

"The age of digital connection has made it much easier to send Canada's high-end service exports all over the world, something many SMEs could benefit from," Mr. Tal says.

(Source: CIBC)

London hosted the 37th London Marathon on its streets this month, the day of reckoning when thousands of first-time Marathon runners finally put their months of training to the test to attain a life-long dream. Here Gary Turner, UK MD and co-founder at Xero explains to Finance Monthly why starting up a small business is more of a marathon than a fun-run.

While not everyone chooses to run one, there are some striking similarities between the process of preparing for the race and getting a small business up and running. ‘It’s a marathon, not a sprint’ is a bit of a cliché, but the premise is correct - success means careful planning, a lot of time, consistent effort and discipline, and patience when the odds feel like they are stacked against you. Although I’m not a Marathon runner myself, I’ve watched others train hard for them, and the gruelling work, the exhaustion and the sheer joy of success are exactly why the two processes are so similar.

Here’s five ways how entrepreneurs and marathon runners can learn from each other:

1. Be clear about your goal

By signing up to the Marathon, runners commit themselves to the undertaking. Visualising success is a huge part of the mental preparation, and it is exactly the same for a small business owner - have a distinct aim that will help to keep you focused.

2. Plan how you’re going to get there

Marathon runners have a clear training plan from the moment they start, covering everything from distances to pace times - and the rest days in between. Once you have a business goal, create a detailed plan to get there, setting benchmarks and smaller aims along the way to highlight progress and keep motivated.

3. Know when to give yourself a break

Days off are vital to give your muscles a break and they are equally as important when running a business. Our recent research found that successful small business owners make sure they are taking breaks to give time for their batteries to recharge - in fact, our research found that more than half of small business owners (52%) admit they want to give themselves more time of fin 2017 than they did last year to prevent burning out. Looking after yourself means you can be at the top of your game.

4. Prepare yourself for the route

It’s vital to know the uphills, downhills and the water stops of the marathon route and the same goes for your business. Study what others have done in order to make their business a success, and be prepared for times when your business might be busier or quieter to help with the first few months of cash flow.

5. Remember you are not on your own

Our research found that a third of successful entrepreneurs have turned to a mentor or support group for advice about their company, compared to just 14 per cent of respondents who ran a business that had to close. Starting the business you have always dreamed of is undoubtedly a personal challenge just as a marathon is, but support is vital. Know when to ask for help and turn to a friend or expert for advice, just like training partners and support teams can help as they cheer you on.

Small business owners are feeling good about sales, the economy and future conditions, with women- and millennial-owned businesses reporting significant increases in sentiment and expectations for the future. Capital One's latest Small Business Growth Index found 50% of small business owners (SBOs) overall feel current business conditions are good or excellent (up from 41% a year ago), and the same percentage expect to see conditions improve in the next six months – the highest level reported since spring 2012.

"It's encouraging to see more small businesses feeling optimistic about their performance and future prospects, particularly women and younger business owners who represent increasingly significant segments impacting our local and national economies," said Buck Stinson, head of small business card at Capital One. "At Spark Business, we're committed to understanding the opportunities and challenges impacting small businesses across the board, so we can build solutions that enable growth and success."

Meanwhile, despite the increased optimism, the survey showed many businesses appear hesitant to invest in people, technology and marketing that may fuel business growth, with a majority of SBOs reporting they have no plans to hire (67%), increase marketing (66%), or invest in new technologies such as mobile payments (62%) in the coming six to twelve months.

Following are key themes revealed by the Spring 2017 Small Business Growth Index. Additional data and insights, including historical, demographic and regional comparisons, can be found here.

Business owners are feeling good and expect conditions to continue improving in 2017.

• Fifty-percent of all SBOs report their financial position is about the same as a year ago and 50% also expect to be in a better position six months from now; meanwhile only four% expect to be in a worse position in six months – the lowest reported percentage since fall 2012.
• Women and millennials are driving optimism, with 47% of women saying they'll be in a better financial position six months from now (up 13 points from fall 2016) and 73% of millennials expecting better conditions (compared to Gen X at 53%, and Baby Boomers at 49%).
• SBOs in the Northeast and South are considerably more optimistic, with 57% of SBOs in those regions expecting improved conditions, compared to the Midwest (45%) and West (42%).

Despite the optimism, most SBOs are still hesitant to invest in the near-term.

• Only 27% of SBOs plan to add more employees in the next six months (compared to 26% one year ago) with nearly two-thirds (63%) of those hires being full-time associates vs. part-time or contractors.
• Top factors SBOs believe may impact business include: taxes (50%), managing cash flow (32%), keeping up with technology (30%), minimum wage increases (22%), access to capital (16%) and immigration reform (9%).

Businesses that use data analytics and mobile payments are more likely to have increased sales.

• Nearly half (46%) of SBOs who currently offer mobile payments say sales have increased over the past six months, compared to 35% who do not use mobile payments.
• Similarly, 44% of SBOs who use data analytics tools report increased sales, compared to 33% who do not.

(Source: Spark Business)

Looking to start your own business? Maybe you’re a few steps in already? You feel like you’re treading on egg shells? Gary Turner, UK Managing Director of Xero, here gives a brief analysis of all that can go wrong, and how to avoid them!

Entrepreneurs deserve a huge amount of respect for taking the leap to start their own business venture as it’s no small feat. You just have to look at the troubling statistics which show 21% of SMBs don’t make it past their first year to realise the challenge that’s set before them. I’ve been vocal that 2017 will be an unpredictable year for the UK economy, and following last week’s budget it’s vital now more than ever that a new business starts with as few issues as possible.
Here are my 6 Don’ts to ensure success in your first year.

1. Don’t rush your dream team

You may have a small network, you may have never hired an employee, and you may have many family and friends happy to help out. This can lead to new business owners bringing in familiar faces to help get them off the ground – but while this is useful for some aspects of work like admin and delivery, external expertise are vital. It’s not advisable to bring in family just because they’re accessible, take the time to recruit people who belong in a small business. The key traits to look out for are ambition and initiative, and an innate ability to work in teams. Alongside a specific skillset for different aspects of the business such as marketing, IT, sales and the like, it will help frame your company as a professional one.

2. Don’t market your company before developing your brand 

The excitement of launching your own business is unparalleled, and naturally you’ll want to shout about it from the high heavens. However, before you go spending money on services claiming to boost the potential of your social media channels, you first need to create your own business identity. This includes creating your own brand values, distinguishing your unique selling point, identifying your tone, and keeping consistent messaging across all PR and marketing. No matter how someone hears about your business, it needs to be in line with where they may hear about you elsewhere.

3. Don’t lose sight of your personal life

Just because you’ve become a business owner doesn’t mean it should become who you are. You need to remember to keep you personal life separate from business. We need to respect ‘burnout’ as a real phenomenon, it’s not something only the weak experience, it’s human to feel run down and demotivated from a lack of enjoyment in life, so take the time to focus on you. A lot of this boils down to balancing work with play, and today’s technology makes accessibility to work a lot more possible. By using the cloud anywhere, you can cut commuting time and spend that time on extracurricular activities.

4. Don’t assume the role of an accountant

There are intelligent software tools that allow you to take your finances into your own hands. Online platforms can allow you to analyse your numbers, expenses, wages, POs/invoices and more. And while we believe this makes small business finance accessible and more easily digestible, nothing compares to the experience of an accountant. They’ll be able to monitor books for errors, use their knowledge to discover your eligible tax breaks, offer guidance and insight as a result of your numbers and more. Yes, accounting tools are important, but using someone’s expertise will help those numbers go that much further.

5. Don’t set yourself unrealistic goals

Ambition is important, but your first year should be the time to get your ducks in a row. Setting specific and high targets can be demoralising if you don’t hit your highest hopes, which is why you should set bronze, silver and gold targets. This will allow for a feeling of success, but it will also encourage you to push yourself to strive for gold – be it sales, exposure, clientele - targets will always be beneficial in building motivation and momentum.

6. Don’t go at it alone

Recent findings from Xero’s Make or Break report shows that, despite Brexit being a huge concern, 58% won’t be seeking help from a mentor. It’s unclear why, perhaps it’s from a lack of access to industry peers, perhaps it’s a strong sense of self-belief, but either way mentors can bring huge benefits . There is no shame in asking for advice, and most people will be happy to share their wisdom and experience. Don’t make a mistake that could have been easily advisable, hit the forums, attend networking events or even ask people in different industries – any knowledge you can soak up is vital to your future success.

Growth in the number of SMEs in the technical and professional sector² has outstripped every other industry since 2010, according to the latest study from specialist challenger bank Hampshire Trust Bank.

The research conducted in partnership with the Centre for Economics and Business Research (CEBR), reveals there are almost 40% more legal services SMEs, architects and vets than in 2010. Other sectors which have seen high levels of growth³ since 2010 are information and communication (33%) and business services (25%). Looking at the UK as a whole, there has been a 17% rise in the number of SMEs from 2010.

The study highlighted that despite a lower percentage of start-ups entering retail and construction⁴, these sectors do have higher numbers of SMEs overall. However these two sectors attributed financial concerns as barriers to growth in their industries which may deter start-ups in the sectors. Nearly two in five (39%) retail and three in 10 (28%) construction companies said competition in the market was the biggest barrier to growth.

Sectors by level of growth

The sectors experiencing a higher number of start-ups correspond to those demonstrating a greater level of confidence when it comes to the long-term economic prospects of the industry they operate in – with three in five (59%) accountancy, IT and communication firms saying they feel optimistic.

Mark Sismey-Durrant, Chief Executive Officer at Hampshire Trust Bank, said: “Our report identifies the critical role of SMEs within the economy, particularly the many micro firms that are emerging in the UK.  It’s encouraging to see SMEs enter all sectors from 2010 – 15 and from our experience many are identifying opportunities for growth in the future. These figures should be seen as a source of optimism for the government in terms of providing employment and long-term economic prosperity for the years ahead.

“As the government prepares to set out plans for leaving the EU, I urge them to keep the spotlight on smaller companies by creating conditions and opportunities which will support the levels of growth our research has identified.”

Nina Skero, Managing Economist at CEBR, said: “This study is yet another indicator of how strong UK SMEs are and the vital role they play within the UK economy. It’s encouraging to see SMEs across various industries posting a strong performance. This further highlights how vital it is to nurture the optimism they are demonstrating if they are to continue driving economic growth.”

(Source: CEBR)