Tag: micro business

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Banks, Lenders & Investors Business Development & Marketing Cash Flow & Forecasting General Rescue, Restructuring & Recovery Turnaround

How does a small construction business plan in volatile times?

The construction industry is always a volatile sector whatever the economic circumstances but figures released over the last couple of weeks have been particularly so.
One survey (from Markit) showed a surge in house building in June, along with an increase in the number of workers being taken on by building firms.
Just a week later, figures from the ONS (Office of National Statistics) seemed to contradict this with a reduction of output by 1.1% in May and indications of a slowing in growth.
While the months being surveyed do not precisely match, this illustrates the difficulties for those working in the sector as self-employed or sole traders, effectively as micro businesses, who need to plan ahead.
As small businesses, many builders lack the security of future orders which relates to them reporting difficulties with securing finance, problems getting credit for the supply of materials and labour shortages due to their own fluctuating demand.
For all small business, being able to forecast and manage cash flow relies on market research and is an essential part of planning for both stability as well as growth.
The building sector has been characterised by many firms paying for the last job with income from the next job. This cycle clearly catches up with those firms when the next job is delayed or cancelled.
While stressful to be stuck in such a cycle, it can be resolved but needs either an injection of cash, or the assistance of a restructuring specialist. The initial advice is normally free but rarely solicited.

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Further thoughts on small business definitions

 

If, as is argued, Micro businesses are unable to take advantage of Government initiatives for small businesses (the S in SME) what about these further two sub divisions?

There are two other types of business that presumably currently fall into the “S” category of SME – the Lifestyle business and the Sole Trader.

Broadly the Lifestyle business can be described as one where its owner(s) deliberately run it so as to allow them to support a lifestyle. They need a satisfactory level of profit but tend not to focus on growth beyond a certain size. Typical examples would be those who want to prioritise their time with children, or those who want to work from home. Such businesses might be based on providing services time can be self-managed such as designers or consultants, or using creative skills to write or make goods for sale. The internet has made many such businesses possible.

The Sole Trader, on the other hand, is a definition used by HMRC to cover anyone who is self-employed. They may have a particular trade or skill they can sell, such as carpentry, plumbing, painting and decorating, accountancy, book keeping and so on, and some may have set up independently as a result of redundancy though others will have made a conscious decision to become independent.

Given time, effort and ambition this second group can potentially grow into a much larger business employing people. There is likely to come a time when the Sole Trader needs support, mentoring and funding to achieve growth.

Plainly, though, to be of genuine, practical help any Government support for the Sole Trader, the Micro Business with fewer than 10 employees and the Small Business, with between 10 and 50 employees should be tailored to each specific group’s needs.

While economic recovery is said to depend on the growth of small businesses what chance is there of Government understanding or adopting this more nuanced and necessary approach to achieve this?

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Banks, Lenders & Investors Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Are SMEs really MSMEs and what is the squeezed Middle?

 

We all use it without really thinking and assume we know what it means.

The acronym SME provokes puzzlement in some quarters and ire in others, according to Daily Telegraph business writer  Michael Hayman, who quotes King of Shaves founder Will King: “Get rid of this casual piece of profanity…It needs to be removed from the Oxford English Dictionary.”

So what is the problem? 

SME is short for Small and Medium Sized Enterprises and that, according to CBI director general John Cridland, means the M in the middle is a “forgotten army”, the middle-sized businesses on which the economy is relying for growth.

But it’s actually a bit more complicated than that since no-one agrees on the definition of small.

The UK and the EU use the same definitions for businesses, based on number of employees and turnover – Micro, Small and Medium – which actually would give us the acronym MSME!

Micro Businesses are those with fewer than 10 employees and turnover under £2 million, Small Businesses consists of fewer than 50 employees / turnover under £10 million and a Medium Business has fewer than 250 employees / turnover under £50 million.

It is argued that 95% of UK companies qualify as Micro Businesses. This has led to the setting up of a parliamentary group, the All-Party Parliamentary Group (APPG) for Micro Businesses, chaired by Anne Marie Morris, Conservative MP for Newton Abbot.

The CBI has calculated that middle-sized companies contain between £20billion and £50billion of unrealised economic output, and are best placed, unlike their smaller brethren, to take advantage of export opportunities in the emerging markets of the world.

The argument is that by lumping them all together the M, Medium, businesses in SMEs are neglected and don’t get the support they deserve.  Equally the other M, Micro Businesses, lose out by being lumped in with Small but actually can’t take advantage of government support aimed at the Small.

What do you think? Do you see yourself as Micro, Small or Medium?  Do you feel neglected? And should we replace SME with MSME?

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Business Development & Marketing Cash Flow & Forecasting General Turnaround

Self Employed? You need to think like a Business

 

The government has been playing up a rise in disposable income, culled from figures compiled by the Office of National Statistics (ONS), but there is one fact that has been conveniently ignored.

This is that the ONS pay figures do not include earnings by the self-employed.

According to the research organisation the Resolution Foundation, the numbers of self-employed have increased by 26 per cent between 2002 and 2013 while their median reported income had dropped by 28% (approximately £4,000) between 2001 and 2010.

The TUC estimates that  540,000 of the approximately 1 million jobs created since 2008 have been through self-employment.

These are the people who supply the “outsourced” services – from plumbing to IT to Marketing to Consulting – that SMEs rely on.  They are also themselves SMEs as far as HMRC is concerned, where they are classified as sole traders.

No matter what their skills, arguably these are micro businesses with potential to grow, and as the economic recovery continues, they will hopefully be able to benefit.

But like any business, even a one-person micro business needs to set goals, have a business plan, understand finance, and have a marketing strategy for advertising and promoting themselves to generate business leads. 

Furthermore they need a passion and determination to succeed.  Being self-employed can be a lonely existence but need not be with the support of mentors, local networking and business organisations, industry groups or business advisors, any and all of whom can make a huge difference.

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