Last month, for the first time in over fifty years, Britain experienced negative inflation. Even though it only lasted one month, speculation has persisted that interest rates will remain low, while household finances appear to have been boosted. While this might spell good news for the cost of living, businesses still face uncertainty as a new government settles in and policy announcements are made. With an affirmed Conservative government, the looming EU referendum is creating uncertainty over the UK’s membership of the EU and what that might look like.
While the economy is undoubtedly moving in the right direction, the businesses that have persevered through the economic recovery are steering themselves through a new environment and we must continue to recognise the work of the people who hold the reins.
The role of small businesses
Small businesses are playing a vital role in this recovery and I am pleased to be hearing more plaudits for the role of small business in government policy, the media and among the business community. SMEs make a vital contribution to growth as they generate jobs, sustain the local economy and contribute to the public purse. Ultimately, many small businesses have survived a deep economic recession and are intent on creating sustainable long-term plans for growth.
What new risks do they face?
Small businesses are facing a wealth of opportunities and challenges in today’s global economy. They have a wider range of stakeholders to liaise with, which means they are having to implement new processes that allow them to discover who these stakeholders are and how much influence they have.
Those in financial roles are subject to greater accountability than ever before. They are producing more frequent reports as they face more calls to be accountable – from tax transparency to access to finance. At the same time, they are meeting an ever-expanding list of less-traditional obligations. Most often these involve general management duties but they can extend further to less obvious areas. Corporate governance requirements, for instance, are more demanding and compel small businesses to take extra care with their organisational make-up and decision-making.
In a global interconnected economy, cyber risks have never been so great and are creating new demands on IT infrastructure and security processes – particularly those surrounding a company’s finances. Cyber security also extends from infrastructure to people, namely how employees in a small business work to protect an organisation’s information.
Recognising financial leaders
While businesses continue to contribute to our country as a whole, it’s worth pausing to reflect on the individuals behind this contribution. Businesses are of course much more than just a sum of their parts but they are nothing without the people that work in them.
The financial challenges of recent years have led to increased recognition for the role of finance directors in particular. This is something I welcome because without these individuals, a business would not be able to succeed.
The recent FDs’ Excellence Awards highlighted the great variety of responsibilities held by finance professionals and their suppliers. Their remits went far beyond what we might traditionally expect from individuals in these positions and the impact this had had on the businesses they worked for was plain to see. If our economy is to continue on this road to recovery, actions and awards like these can only be encouraged.
Celebrating talent is worthwhile, perhaps now more than ever. I call on all of you to look to people in your own organisations and think about how you might assist their development and reward their success.