Small to medium-sized enterprises (SMEs) are anticipating a year of growth in 2014, according to figures from Yorkshire and Clydesdale Banks, with 97% – 4.5 million SMEs in total – planning to invest in growth. The statistics make for promising reading for the UK economy, with SMEs often described as the lifeblood of the nation’s business sector as a whole, and build on reports of substantial new companies being launched in 2013.
Earlier in 2013, Direct Line noted the number of Brits who were launching businesses of their own as a way of boosting their income from a day job – around 800,000 new launches in local areas throughout the UK in the first half of the year. The insurer’s research found that 36% of people undertake some activity to boost their primary income each month, even if it only involves selling items on online auction sites, and across the board they average annual earnings of over £2,500.
For those going the extra mile to launch a new business as their primary means of employment, having all of the right legal contracts in place could help to protect any additional income earned, as well as to ensure there can be no doubt about customers’ obligation to pay for work done.
Looking to the future
Looking ahead to 2014 and the Cydesdale/Yorkshire Bank report, it seems many businesses are likely to need further business documents in place to ensure the legality of new recruitment measures or other types of expansion. The survey found an almost unanimous 97% of SMEs plan to invest in some way in their own expansion in 2014, with 60% saying they are doing so to keep pace with growing demand, reversing the effects you might expect to see due to austerity measures.
A majority (57%) said they are taking an optimistic approach to investing, putting funds into their business as they hope to see growth over the coming 12 months – and a reassuring 43% said they currently perceive no barriers of any kind to their investment.
Promisingly, while many SME managers face the challenge of performing both their primary task and all of the necessary admin, the main barriers to investment that were identified by the survey did not relate to red tape or burdensome paperwork. Instead, one in four SMEs were worried about the availability of funding, and 18% said their largest current challenge is finding new customers.
Again, for those whose customer base is growing rapidly, paper client contracts are one way to ensure that the level of service that is required is set out from the start, along with any specific rules regarding payment. SMEs venturing into employing a workforce for the first time, as their order books become overwhelming for an individual, should also ensure they have contracts of employment in place that spell out employees’ duties, any obligations regarding confidentiality of data, and potential grounds for dismissal.
With this kind of focus on any issues that arise during investment and expansion, SMEs can protect themselves against unwanted shocks, and give themselves the best possible chance of capitalising on the potential of the coming 12 months. In amongst all this enthusiasm for business and entrepreneurial spirit, the importance of getting the paperwork right must never be underestimated.