A quarter
of SMEs believe their companies will fold in the next five years – but with new
technology advancements and use of AI, businesses can hope to solve the issue
with late payments and increase productivity
The first five years of launching a business is the most crucial. With new technology and state-of-the-art equipment, are SMEs confident their businesses will power through the tough times? Unfortunately, not everyone is that positive. A quarter of SMEs believe their companies will fold in the next five years, according to an in-depth report from online accounting software platform, Xero.
Over 2.6 million small and medium business owners admitted having concerns about the future of their businesses, and 1 in 4 believe their company will flop in the next five years, Xero’s Business Rewired report found. The in-depth report examined the greatest causes of concerns business owners have for the future as well as emerging trends to prepare for.
However, it is not all doom and gloom for SMEs across the UK. With rising technology, business owners can expect to see new improvements in day-to-day operations across several departments, increasing overall productivity and efficiency in the running of their company.
“We wanted to look at the challenges that they are facing right now, whilst showing them that it’s not all doom and gloom,” Gary Turner tells us. “New technology and trends are changing the way we work, for the better. We worked with business futurist Gerd Leonhard to identify these emerging trends and found that small business owners of the future will be more socially-conscious, rely less on email, and become fluent in hiring staff with multiple jobs. These trends represent a huge opportunity for those ready to embrace them.”
Technology and artificial intelligence (AI) could eventually take over jobs that do not require human-skill, according to the Business Rewired report, replacing mundane routine work in order to facilitate the growing demand for fast-paced operations.
“The report also explores how technology and AI will eventually become smart enough to significantly augment human work, performing routine tasks that don’t require human-only skills,” Mr Turner said. “As well as increasing productivity, this will hopefully mean an improved work-life balance for the backbone of the UK economy.”
Increased technology could also help solve the issue of late payments plaguing businesses across the UK, with 41% of business owners saying receiving late payment is now becoming “culturally unacceptable”, according to the report.
Small businesses are owed an average of £23,360 in overdue invoices and have to wait approximately 14 days after the due date to be paid, statistics have revealed.
“Late payments are already becoming a societal issue, and this will continue,” Mr Turner said. “We will see more pressure being put on the industry and the government to make tangible change. 41% of small business owners say paying late is starting to become as culturally unacceptable as unequal pay, poor diversity and lack of equal rights.”
“Over the coming years pressures from the growth of the blended workforce, cloud technology and the increased use of digital money may finally solve the late payments epidemic,” he added. “End-to-end digital transactions, and a change in the number of companies individuals work for, will require the setup of a new type of payroll with the need for people to be paid faster than the usual 30-day invoice terms.”
According to the Business Rewired report, an overwhelming number of people are concerned about being made redundant due to rising technology – but Mr Turner insisted there is nothing to worry about, revealing how only 5% of jobs in the world are fully automatable.
“Our Business Rewired report shows that people are concerned about technology taking their jobs or making roles redundant,” Mr Turner added. “In reality though, only 5% of the jobs that exist today consist of activities that are fully automatable. There’s so much more room for opportunity when technology is performing to its full potential in a business – and 85% of the jobs that will exist in 2030 haven’t even been invented yet.
“So instead of worrying about technology taking over, the challenge for business owners is to adapt and embrace these changes and think about how their human skills and capabilities can set them apart from machines.”
SMEs are facing an overwhelming uncertainty on the future of their businesses due to Brexit – however, there are several other factors that could come into play. The issue of late payments, cash flow, and Britain’s dwindling high streets are all causes of concern that small businesses feel could put their company on the brink.
“This is a challenging time to be a small business owner,” Mr Turner said. “The ongoing uncertainty that comes with Brexit, the death of the high street and the perennial issues of late payments and cash flow are just some of the challenges facing the SME economy right now. On top of this, in the next 20 years we will see the biggest technological transformation in human history – impacting where, how and why we work. The challenge here is for SME owners to not get left behind.”
Despite the causes of concern, Mr Turner insisted the future is still bright for small and medium businesses. With new advancements in technology, a thriving young workforce, improved quality of life and strong ethical purpose, businesses across the country can expect to see fruitful growth and prosperity for years to come.
“At a time when so much in our economy is uncertain, it’s unsurprising that small business owners are worried about the future,” Mr Turner said. “However, the stigma of business failure is not what it once was. Unhindered – empowered with technological tools and a different mindset – younger generations will lead the way and rewire future business. Incumbent business owners, and their advisors, will need to adapt. With this in mind, the future is bright for SMEs and that’s really what our Business Rewired report shows. Quality of life for small business owners and employees should improve and technology will give these enterprises tools they’ve never had access to before.
“We’ll also see the rise of small businesses with a strong ethical sense of purpose, as potential employees look for businesses with a strong social conscience to work for. Currently, 43% of small business owners prioritise business purpose over profits.”
With further advancements in technology and the use of AI, we can only hope to see a positive impact in time to come. Resolving the issue of late payments can help thousands of businesses across the sector, allowing for smooth operations and increasing overall efficiency.
