What Is an SME Business?

Everything You Need to Know About SMEs - Including What They Are

Thinking of starting up your own business? The UK is largely fuelled by SMEs. They make up the majority percentage of the nation’s business portfolio, putting them at the heart of our economy. But there are various factors that determine whether your business can actually be classed as an SME or not.

What Is an SME?

The classification of your business will impact the way that you run it, so it’s important to understand where you sit on the scale of SME to large enterprise. But what is an SME? There are varying descriptions and classifications provided by different organisations. In short, SME stands for ‘small and medium-sized enterprises’ – though not all small businesses can be classed as SMEs, which is where it can get a little confusing. These businesses are typically defined by their staff headcount and their turnover or balance sheet.

What Are the Small Company Thresholds?

Small businesses are identified as SMEs if they have an annual turnover of £10.2 million or less, £5.1 million or less on its balance sheet, or less than 50 employees (gov.uk).

Source: https://www.gov.uk/government/statistics/business-population-estimates-2019/business-population-estimates-for-the-uk-and-regions-2019-statistical-release-html

Examples of Small Businesses

Millions of people across the UK work in SMEs. Here are a few examples of small businesses:

• Personal trainer
• Coffee shop/small business owner
• Landscaper or gardener
• Freelance writer or designer
• Life/career coach
• Caterer
• Property manager
• Photographer
• Tutor

What Challenges Do Small Businesses Face?

It’s no secret that starting a new business and branching out as a self-proclaimed entrepreneur comes with its own challenges. There are many reasons why small businesses can fail. Running out of funds is one of the most common causes of business failure. With many outgoings to counteract profit margins, businesses often struggle to stay afloat. This also ties in with poor financial planning and the lack of a strong business plan. Some prospective business owners may also underestimate the amount of effort that comes with running a business. It’s not just about selling a service or product, or being a “people person”. Business owners must also consider the need for management skills, as well as their experience in marketing, finance and HR.

How to Grow a Small Business

Looking to take your home run or small business to the next level? Here are a few tips to follow to help you grow your small business:

• Work on your website – from the homepage to product/services pages, make sure you’re including all of the key selling points of your product or service. If your site isn’t easy to navigate, potential customers will likely go elsewhere. Poor, or generic copy can also be off-putting and a badly designed website can deter conversions, so it’s important that you get the basics right.
• Get to know your target audience– who is it that you’re marketing to? If you really nail your audience, you can ensure that all of your marketing activity is ticking all of the right boxes. If you don’t get it right, you’ll likely only deter customers.
• Make use of social media – it’s no secret that social media is a powerful tool. If you wield it properly, you can reach a vast audience at once. It’s also a great tool to help you stay relevant and it can be an effective way to attract new customers or clients.
• Invest in the best software – if you’re trying to do everything alone, you may be limiting your potential growth. Employing the right software can help you manage your expansion on multiple layers.

For more advice on how to start a small business, check out our guide.

What Is the Best Software for Small Businesses?

Growing your business is about more than just clever marketing techniques and sales. For a business to run smoothly, it’s important to have the correct software in place to help the process. However, as a small business, making these decisions is more crucial than ever. It can be a large financial commitment for small businesses to invest in software. That’s why you need to make sure that you’re investing your money in the best tools for you.

The best software for small businesses will not limit growth. Instead, it will support them in a range of essential, everyday tasks and operations for smooth and efficient running. For example, there are many small business owners who struggle with their accounting – and outsourcing the job to a professional can be expensive. Accounting software allows them to track their accounts and have a clear understanding of their profitability, highlighting areas for potential growth. Not to mention getting prepared for the all-important tax season!

On top of accounting and bookkeeping, the best software for small businesses also includes those in the following areas:

• Marketing
• Customer service
• Project management
• HR and recruitment
• Communication
• Document management
  

Are you after an efficient, secure, paperless document management system to handle your files? Virtual Cabinet provides an agile and adaptable solution for your business – suitable for businesses of all sizes. We have experience in working with large organisations as well as smaller enterprises. So no matter how many files you have, or what industry you’re based in, our experts can provide tailored advice to help you meet your company document retention periods.

Book your free demo today and we’ll answer any questions you may have about how a document management system might benefit your business.