4 challenges and opportunities for SMEs to thrive

Small and medium enterprises (SMEs) experienced a loss in demand and revenue during the pandemic and continue to face various challenges in today's rapidly evolving economy. While governments supported SMEs in 2020, for example by providing tax relief, these strategies did not necessarily set up firms to thrive in the long term.

SMEs represent a significant proportion of the world economic activity in both developed and developing countries. According to the UK government, UK SMEs account for 60% of employment and around half of revenue in the UK private sector.

With SMEs emerging as key drivers of growth and innovation, it is important to identify the opportunities available to allow them to thrive and build their brand positioning within the industry. 

Below we look at possible challenges and opportunities for SMEs to thrive and gain competitive advantage.

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1- Keeping up with digitalisation

Most companies across the world are becoming more automated and SMEs are at risk of being left behind. Digital solutions are often designed for larger enterprises and can be difficult to scale for SMEs.

However, with technological advances SMEs can benefit from more affordable and accessible tools and channels. 

Opportunities

‍Cloud computing, e-commerce selling capabilities, and digital marketing strategies have revolutionised the way SMEs conduct business. These opportunities allow them to streamline processes and operations, increase their market reach, enhance online presence and visibility, and engage with customers globally.

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Cloud computing, e-commerce selling capabilities, and digital marketing strategies have revolutionised the way SMEs conduct business. These opportunities, including the use of VPN (Virtual Private Networks), allow them to streamline processes and operations, increase their market reach, enhance online presence and visibility, and engage with customers globally.

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2- International expansion

Even prior to the COVID-19 pandemic, it was a challenge for SMEs to sell outside of their local economy. Unlike larger companies, many SMEs do not have the resources to expand into new markets. In addition to this, uncertainties the pandemic has brought to internationalisation of companies and specific industries, for example the tech industry, further complicates expansions. 

Opportunities

‍In order for SMEs to expand internationally they can conduct thorough market research to gauge the interests and needs of other target markets, and tailor their products or services to fill in gaps they identify. It is also important to consider the localization of their content in order to serve a wider audience. 

SMEs can assess the financial and regulatory implications of an expansion and explore possible government initiatives to support SMEs entering new markets. 

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3- Talent acquisition 

Employee attrition can affect an SMEs’ overall growth and ability to overcome the above challenges. Acquiring critical talent is essential for SMEs to build a skilled workforce that can drive innovation, productivity, and growth. Owing to limited resources, some SMEs may not be able to provide clear promotion and progression across all roles, match all salary expectations, or offer training and development opportunities. 

Opportunities

‍Defining talent needs and streamlining the hiring process will help focus recruitment efforts and target candidates with the right skill sets. Building a strong employer brand can also contribute to attracting top talent. SMEs should work to develop competitive compensation packages that align with industry standards and offer additional benefits to stand up against the competition. 

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4- Addressing legal issues 

Many SMEs do not know when or whether to involve lawyers – and some may not recognise when they have a legal issue. They also may find it difficult to address these issues with manual processes, but there is an ongoing concern that these are the more affordable and accessible options.

Opportunities

Legal tech can meet the needs of SMEs, from streamlining their processes, driving efficiency, resulting in lower costs and, also creating and managing legal documents, such as with contract management software. The Lawtech UK Report 2021 reported that UK based SMEs could save up to £8.6 billion each year by using legal tech softwares and services. 

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About Legislate

Legislate is a legal technology company that can help any scaling business create, manage and track all of their legal contracts. With Legislate, all parties can sign contracts electronically, making the process more efficient and offering compliance as a service. Book a demo or sign up today.

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.