Recession is something that UK SMEs have been dealing with for a really long time. We have all had to adjust to the changing business world and get to grips with the challenges that often face us.
Today, more and more growing business owners are less likely to be focused on national or say international politics and economics. They are more likely to be focused on achieving success locally and overcoming immediate business challenges as they succeed.
The year 2017 marked the slowest growth in the UK economy. Even today, we know the struggle the UK economy is facing (with uncertainty of Brexit). This means that the growing amount of business owners have to believe in their business enough to take risks with investing.
With increasing competition in the market, most businesses are left with two choices:
- Either have to face the risky choice of investing or
- Have to leave the business game
But if the growing business owners have to borrow money to make an investment, who would come to their rescue?
As the British Banks struggle to sustain the UK SMEs, the government has found another way to do so. This has certainly given rise to the alternative finance business across the country.
There are several alternative finance firms that provide funds to start-ups and small businesses at a comparative lower rate than that of the British Banks. On the other hand, lower inflation and steady interest rates is said to help growing businesses and consumer spending.
In the meantime, the EU workers are leaving Britain due to the fear of Brexit side effects (the UK SMEs are yet to know effects of Brexit on them). With low employment along with the decreasing standard of living over decades has resulted in workforce negotiation for higher wages.
Although the UK employment is forecasted to rise in the next five years, it is not going to help the SMEs facing these negotiations in the short-term, especially in a country with major skill shortages.
As the UK has dropped behind all other G7 economies in 2017, many business challenges and changes are to be faced in 2018. Apart from all this pressure on the UK firms, we also have an unstable government.
So, if the wages increase along with an increase in pension contributions and increase in minimum wages, the businesses facing these challenges will have to increase the prices and will ultimately experience rise in inflation.
However, there has been some good news for the UK firms. Most people predicted the incredible rise in the Bitcoin and other crypto-currencies. Although this was launched back in 2009, it was not until 2017 that crypto-currencies made headlines worldwide.
According to a website (CoinMarketCap.com), the total market value of capitalisation of crypto-currencies has topped $500 billion (which is a rise of over 3000 per cent) in 2017.
Now, crypto-currencies have become a mainstream currency. But those days are not far off when we start paying for our daily loaf with Bitcoin. Against all odds, the traditional stock market experienced rise in 2017 (both in the Europe and in the USA). This was despite the investors worrying about the Trump rule, the Kim Hung Un, Brexit, the Middle East, Russia, China, Mexico and Boris Johnson.
Overall, the International Monetary fund still believes that the global economy will do slightly better in 2018, although the UK efforts are stagnant. On the other hand, economists have a semi-optimistic view of the year ahead, although with some cautions of stability and a fair wind.
The British Banks continue to struggle and are shrinking at a faster rate. The main reason behind this is that they are unable to provide the ease of digital banking which is now in demand in the market.
However, the UK retail sector believes that the pressure on all the high street retailers is merciless. Theo Paphitis was quoted saying: “In all my business years, I have never seen it so difficult and unforgiving.”
Paphitis however blames the UK government for pushing the retail to the edge of the cliff, with an explanation saying their (the government) thinking fall way behind the global development in areas of business legislation, policy and taxation along with their continuous disinterest in retail. We understand his point of view but it is nothing different in other sectors.
As the modern consumers are very impatient, financial brokers may find their roles under a lot of pressure, especially when the middle men are dropped for increased speed and increased customer services.
Many financial services have started to struggle due to the disturbance caused by shared economy and digitisation. As mobile banking takes force, firms are prone to more cyber attacks. This highlights the importance of tech security in the business world, especially where voice recognition ID is particularly evolving.
Alongside, there is an increase in Internet of Things (IoT) hacks and attacks as well. Adding RATS (remote observation tools) to this risk list, UK business owners have to invest a lot in IT security in near future.
Additionally, GDPR is most likely to produce extremes of panic or disinterest, depending on whom do you talk in your business. Whereas, most other believe that workplaces are going to step up their game by imposing heavy anti-harassment policies in 2018, as the wave of accusation increases.
Although 2018 is not likely to be the year that we are suddenly find ourselves without jobs due to automation, it is certainly the year that we need to start implementing changes.
We believe that automation will be impacting on all our lives moving forward and that eventually, the hunt for a job may become even more difficult.
With changes in technology, AI, changes in the economy and changes in the standards of living, many business owners are in for a tough ride but with the right knowledge, any entrepreneur should be able to sail through without too many issues.