It’s hard to underestimate the role that SMEs play in driving the UK economy as a whole, with small and medium-sized firms currently accounting for an estimated 99.9% of the total business population.
This includes a large number of tech startups, many of which have benefitted from significant and sustained investment in leading UK metropolises such as London, Manchester and Liverpool.
Regardless of the importance of these relatively small firms, most aspire to grow into big businesses over the course of their lifetime. So, here are a few tips to help them achieve this objective.
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Reinvest in the Business
The key to every successful business lies in funding, as no company can achieve its full growth potential unless it receives the adequate capital and cash flow (no matter how innovative or exciting it may be).
One of the best ways to achieve this is to reinvest in the business at every opportunity, while identifying increasingly creative ways to fund your venture without overspending or compromising the long-term wellbeing of the firm.
For example, you could look to invest capital into an enterprise investment scheme. In simple terms, this enables you to claim an impressive 30% income tax relief on investments of up to £1 million, while retaining the option to carry back to the previous financial year.
This type of scheme can reap huge dividends and enable you to continually reinvest in the growth of your SME.
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Keep the Cash Flowing
Sustained reinvestment can also help your SME to maintain a healthy and functional cash flow, which can actually be one of the biggest challenges facing companies during their formative years of trading.
The reason for this is simple; as growth requires spending and puts a strain on your cash flow, which is also why so many companies fail to navigate their first year in operation.
So, it’s important to manage your cash flow prudently, particularly when you also consider that tech ventures are typically cash-hungry and reliant on huge investment sums.
If you find that you’re struggling during your initial months of trading, you may also want to consider factoring as a way of optimising cash flow. This enables you to leverage your accounts receivable and take on short-term debt, which can negate 60 or 90-day payment terms and be repaid once customers settle their invoices.
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Prioritise Your Team and Delegate
While entrepreneurs tend to wear many hats out of necessity, it’s important that business-owners focus on strategic tasks and realising core growth objectives.
This means distinguishing between such tasks and day-to-day management requirements, which ideally should be delegated to key stakeholders within the business and senior members of staff.
Of course, this can be challenging for any entrepreneur who’s invested in their venture, but this is why it’s so important to recruit the right people and invest in employees who share your values, outlook and vision wherever possible.