Small businesses are the backbone of our economy. You’ve heard that; and it’s true.
Definitions of small businesses differ greatly – the US’s government’s Office of Advocacy defines a small business as an independent business having fewer than 500 employees whereas the EU defines them as having less than 50 employees. At Sage we are closer to the latter definition, and of the research respondents 76% had between zero (sole traders) and 19 employees, with 95% having less than 100 employees. But what isn’t in doubt is that both in North America and Europe 99% of all businesses are considered small and to say this is a significant number would be the understatement of the year – across the countries we surveyed this equates to something in the region of 45 million businesses. These businesses paint a compelling picture of businesses across two continents worrying about, perhaps not surprisingly, overheads, costs and revenues and knowing they have to address expenditure, grow their business and find new customers.
Looking back in 2010, across the board, small businesses agree the biggest challenges for their businesses have been around finances and responses focus on the need to managing cash flow, maintaining revenue and rising costs. Access to finance is a big issue – especially in the European countries, perhaps confirming the US as a country that has a more vibrant venture capital market – and across the board bureaucracy and legislation is seen as a limiting factor for small businesses.
And looking forward, these challenges are similar with the top three biggest business challenges being maintaining/growing revenue, controlling rising costs and gaining new customers.
But in the midst of all this, there is still a feeling of resilience with the majority of businesses polled acknowledging entrepreneurial spirit and good business culture as the best thing about doing business in their countries.
It’s this kind of business soul that got the world through recessions in the past and will ensure they emerge stronger and wiser this time round.
Are you a small business – do you agree with these findings? What do you perceive as the biggest challenges you face? Which piece of legislation is it that takes up your time and money? Let us know your experiences and outlook for the year ahead.