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SMEs: scale, success and start-ups

Oct 2, 2018, 11:47 AM
Numerous opportunities for corporate advisers
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SMEs are the backbone of the UK economy, a major source of economic growth and the key to opening new markets and creating jobs. The sector provides numerous opportunities for corporate advisers says Simon Candy, Group Protection Propositions and Technical Manager.

If you’ve ever started your own business and prepared some potential company names to register at Companies House, you might recall going back to the drawing board – or laptop – to make last-minute changes. The range, breadth and depth of business names – and their variants – reflect the vibrant, entrepreneurial nature of the UK’s thriving SME sector. But just how big is it? The most recent statistics (1) show that SMEs account for at least 99.5% of the enterprises in every main UK industry sector. The sector’s sheer scale is breath-taking, where 5.7 million businesses generate almost a half (51%) of private sector turnover and have created 73% of all new private sector jobs since 2010 (2). As such, the SME sector could be considered as the engine room of the economy, from which all the green shoots thrive.


SMEs and large corporates: research reveals a ‘trust gap’

So how do SMEs feel about the bigger companies with which they do business? Recent research (2) with 500 UK SME business owners reveals a ‘trust gap’, which can make uncomfortable reading for larger organisations who provide essential SME banking, legal and technological services.

What should be smooth terrain can often be rocky ground. For example, 95% of SMEs rely on technology in some form or another to trade in the first place and 53% see ‘tech’ as central to their business proposition. However, the research revealed that for SMEs, their experience with basic business services from major companies – mobile telephony, for example – was frequently disappointing, and less impressive than what they had experienced as personal customers. Almost six in 10 SMEs felt that big B2B service providers ‘treated SMEs all the same’ and over half stated that they ‘didn’t trust big corporations to understand the challenges of running a small business’. And the more ambitious the SME, the higher the level of dissatisfaction.

Another commonly-held view was that large service providers fail to address the unique requirements of each business with services described as ‘one size fits all’ and one respondent stating: ‘the fact most banks treat all SMEs as the same is insane’. To provide some balance, many of these findings come with the territory. A glance at most business biographies reflect the same ‘small guy vs big corporate’ narrative, a theme which has been going strong since David fought Goliath.


The space where corporate advisers can help serve SMEs

What is bad news for industrial giants can be good news for corporate advisers because the dissatisfactions of SMEs provide an important space in which agile consultants can help bridge the ‘trust gap’ between the two business sectors. But when is one of the best times?

All businesses start somewhere, and our research with Xero and Loudhouse (3), focused on SME start-ups during their first 12 months. It’s here when activity can be intense: from registering the company, establishing bank accounts, selecting an accountant, hiring staff, registering for VAT, PAYE and NI, creating the essential website with domain registration and getting to grips with accountancy software, always a challenge. In fact, the research found that 62% of SMEs found managing the accounts one of the least rewarding elements of running a business. For insurance, 60% found it difficult to know what types of insurance cover they need as a start-up, while 58% agreed that insurance is an area of business management that is becoming more complex.

It’s right here at this hectic time that corporate advisers can provide exemplary service to SMEs, providing advice and guidance on public liability, employer liability and professional indemnity insurance, followed by a workplace pension, private health cover, group protection, commercial vehicle and cyber insurance.

To sum up, ambitious SMEs will always feel ‘up against it’ with bigger businesses, a rite of passage which many of today’s leading business titans endured. This level of dissatisfaction provides the space where corporate advisers can thrive as they provide valuable consultancy services with a tailored and personal approach across a wide range of insurance -based services.



(1) Department for Business, Energy and Industrial Strategy: Business Population Estimates for the UK and Regions. November 2017. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/663235/bpe_2017_statistical_release.pdf

(2) SMEs ‘Smallish Misunderstood Enterprises’. Adaptive Lab 2018

(3) UK Small Businesses Insight ‘Start-up Stopwatch’ research: 500 online interviews with SME owners and directors in the UK. Aviva/ Xero/ Loudhouse 2017.

GR06172 09/2018

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