In 2018, SMEs employed a huge 16.3 million people, which equated to 60% of all private-sector employment in the UK.
In 2018, SMEs employed a huge 16.3 million people, which equated to 60% of all private-sector employment in the UK. Evidently, these businesses are key in supporting the UK economy and it is vital that they continue to flourish. Office rent is one of the biggest overheads for SMEs after salaries and, with commercial rent costs increasing rapidly in the capital along with a younger workforce prioritising flexibility over pay, SMEs need to seriously reconsider their basic office space requirements if they are to thrive. Business leaders must think about how the workplace can be reimagined to help to cut costs, attract talent, and ultimately, promote productivity.
The savings that SMEs could benefit from are clearly illustrated in recent research by PowWowNow combined with official Business Population Estimates from the Department for Business, Energy and Industrial Strategy and commercial rent costs collated by Colliers International.
The research shows that small and medium-sized enterprises (businesses with between 10 and 249 employees) in London could save a staggering £18,600 a year by implementing flexible working and downsizing their office space.
If SMEs in the capital allowed just 1 in 5 of their workforce to work remotely, they could save on average £1,544 a month in rent by revaluating their office space requirements. Those willing to implement flexible working for up to 30% of their employees could save more than £2,370 per month.
The Department for Business, Energy and Industrial Strategy indicates that there are over 16,455 small and medium-sized business now based in the capital; meaning these potential savings could amount to a combined total of over £306 million a year.
Meanwhile, companies in the Finance and Insurance industries based in London could benefit from making the highest savings. SMEs in these sectors could save £27,970 a year by allowing 20% of their workforce to work remotely and thereby reduce their space requirements.
Business outside of London can also benefit; companies in the East of England stand to save on average £444 per month, equating to a significant £5,328 a year by implementing flexible working. Moreover, office-based employers in the North East would be able to save £430 per month if they allowed 20% of their employees to work remotely; and almost £650 a month if they upped this to 30%.
Elsewhere, in the South East, business owners could benefit from upwards of £7,100 in savings per year by allowing 20% of their staff to work remotely, compared to the potential savings of £4,440 a Welsh business owner could be saving per annum.
The financial business benefits of implementing flexible working across the UK are clear. By taking advantage of technology to enable employees to work away from the office, small business owners can promote a productive working environment that not only reduces their rent overheads, but also allows workers to benefit from a more relaxed office culture. With a growing trend towards flexibility and flat-company cultures, employees will therefore be happier and more likely to stay with the company long-term, setting businesses up well for future growth.