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SMEs face a trilogy of conundrums, says Prism
With SMEs now facing a ‘trilogy of conundrums’ in an impossible climate, we ask Gary David Smith, director for Prism UK Ltd (www.prism.uk.com) for his views on the series difficult decisions which SMEs will need to make as the clock starts ticking down.
“International trade is struggling in the eye of a perfect storm. The global economy is threatened by increasing interest rates, a massive reduction in liquidity, and ever-rising costs. Recovery from global challenges in the shape of COVID, legislation confusion over Brexit, and ongoing trade throttling via the Ukraine conflict appears far from simple.”
“While larger corporations and more established brands and household names may weather such storms (albeit with some uncertainty), SMEs are now facing a 'trilogy of conundrums' – and millions of millions of small to medium business owners have their hands tied while faced with the question of ‘How do they continue to make revenue, to provide services, and to even survive in this type of climate?’
“While many start-ups are thriving depending on the niche, established businesses are faced with making one of three potentially catastrophic, reactive decisions. It really is make or break.”
Smith refers to three key routes that SME owners could be facing as a result of the current squeeze:
Do they increase prices?
Do they reduce costs outright?
Do they restrict sales?
“All of these potential conundrums could lead to big changes for small businesses. These routes lead to a reduction in choice, an increase in pricing across the board, and a focus on more localized procurement. This doesn’t sound like great news for the average consumer, but it may actually be beneficial for local economies.”
“A more prudent attitude to business and revenue-building could lead to lower consumption. Additionally, local procurement equals greater reliance on local enterprises – and the economy. Lower consumption as a result of these conundrums – and adapting as such – could also help the environment, and lay a healthy groundwork for generations to come.”
“While there are positives and negatives to shifting away from a global model to a more local focus – should needs demand it – business owners may need to plan for the future more so now than ever before. They will need to consider how moving to a more prudent, localized model of working affects workforce upskilling, and whether transferring skills or mapping out a clearer plan for succession can make the business more resilient for growth.”
“In the current climate, the ability to pivot – not purely having the right attitude – is crucial. Strongly-funded start-ups, for example, are designed to pivot at short notice, but can the same necessarily be said for more established businesses and services? How can established businesses move from global to local landscapes successfully?”
“Unfortunately, entrepreneurs, business owners and commerce operators are left to work out how to evolve in the face of adversity. It’s a landscape that many operators have never had to travel before – and they will need to consider what they must do to evolve and survive, or face folding their businesses altogether.”
“The golden formula for business growth – ‘capacity + capability + desire’ – is currently under threat. Who can safely say they have all three right now? No matter the industry or niche, very few SMEs can confidently say they have all sides of this equation covered. We’re all affected by this ongoing economic recovery, and that absolutely applies to consumers as much as it does entrepreneurs and business owners.”
“The COVID-19 pandemic brought about potentially positive change to the economy as much as it caused untold chaos. Necessity forced businesses and consumers to move to a more digital landscape sooner than they may have otherwise anticipated. While this may be considered positive from some angles, it arrived at a time of unprecedented challenge for trade elsewhere.”
“The perfect storm of post-Brexit red tape, the Ukraine conflict and ongoing recovery from the pandemic is proving difficult for many business owners to visualize. We’re approaching a whole new landscape that’s evolving from multiple challenges arising at once.”
“We must stay hopeful that the entrepreneurs and business owners left operating – especially those with less experience than most – can come out the other side.”
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