2012 UK SME Business Owner Survey Report


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Online survey report by CEOs and MDs of medium-sized businesses (SMEs) with their perspective of prospects for 2012.

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2012 UK SME Business Owner Survey Report

  1. 1. 2012 Business Owner Survey Report by @adrianreeve January 2012 -1- € 2012 Adrian Reeve
  2. 2. Introduction2011 was a turbulent year politically, economically and commercially with fewcorporate winners. •4 trillion was wiped off global markets and the UK’s largesttrading partner, the EU, ended the year as a basket case in the eyes of manyobservers; winning the dubious award of possessing the world’s worstperforming currency.1Even companies deemed to have been successful during the past few yearswere not immune. The share prices of the majority of those companies whichlisted during 2011 were underwater at the year end.2In the March 2011 Budget the UK Government unveiled its response to theworsening situation and published its “Plan for Growth”3 which includes thefollowing four ambitions: create the most competitive tax system in the major economies (G20) make the UK the best place in Europe to start, finance and grow a business encourage investment and exports as a route to a more balanced economy create a more educated workforce that is the most flexible in EuropeThis snapshot survey was completed online from December 2011 to calibratehow, in the face of these pressures and potential central stimuli, owners andleaders of small and medium sized businesses (SMEs) are viewing 2012.Responses were provided by individuals with the following business titles:Chairman, Chief Executive, Managing Director,President, Partner, Director and PrincipalTheir businesses operate in the following sectors:Automotive, Construction, Information Technology, Internet,Financial Services, Management Consultancy, Manufacturing,Media, Publishing, Recruitment, Support Services and Transport.The results and some commentary are summarised on the following pages. -2- € 2012 Adrian Reeve
  3. 3. 1. The single most important issue facing my business in 2012 is 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Lack of Lack of Reducing Coping with Payment People Competitive customer growth margins rapid growth delays issues pressure orders financeThe single issue faced by the majority of these business leaders is a lack ofcustomer orders. Hardly a surprise given the economic uncertainty which hasled to reduced customer demand and consequent de-stocking in supply chains.4According to Markit Economics, which produces the Purchasing Managers’Indexes™, manufacturers are leaning heavily on backlogs of work to prop upproduction. This is only a temporary fix, and the trend in overall order booksneeds to improve if the sector is to avoid a protracted period of lacklustreperformance.5In addition the Bank of England sees the economy stagnating until the middle ofthe year, and some policymakers have warned it may shrink in the first twoquarters as the euro crisis weighs on business confidence and cash-strappedconsumers cut back on spending.6 -3- € 2012 Adrian Reeve
  4. 4. 2. My business will grow in 2012 if we can achieve one of the following 60% 50% 40% 30% 20% 10% 0% Gain some NEW Increase orders Introduce a new Do more Train people customers from EXISTING product or business online more customers serviceIf gaining new and increasing existing customer responses are combined theyrepresent 73% of responses. The majority response, gaining new customers, iseasily the preferred approach to that critical issue of a lack of customer orders.Interestingly this far outweighs gaining additional volume, or margin, or both,from existing customers. This may be easier in theory than in practice givenresearch which indicates it can cost six times more to sell something to aprospect than to an existing customer.7Increasing online business gains little support which seems more than counter-intuitive given the fact that online spending is a clear growth area in the UK,growing at 16% per annum.8 This may reflect the higher proportion of B2Bcompanies responding to the survey. -4- € 2012 Adrian Reeve
  5. 5. 3. Do you expect the percentage of online business to increase in 2012? 60% 50% 40% 30% 20% 10% 0% Increase Constant DecreaseGiven the growth of online spending and its visible impact on the shape of theUK high street and the increasing importance of the internet in the purchasingdecision it is, perhaps, surprising that there is not a more marked differencebetween the two responses. Everyone is agreed, however, that online businesslevels will not decrease.B2B businesses face the challenge of managing multiple channels or routes tomarket. Gone are the days when all that was needed was a reasonable web sitewith some downloadable brochures. Specifiers, decision makers, procurementspecialists and consumers are already using the power of the internet to huntdown the best deal, which can make customer loyalty a thing of the past.Although orders may not arrive online for some B2B companies, the part theinternet plays in the entire buying process is more than likely to increase.Research indicates that:  Almost half of UK smart-phone owners use their devices to research products before buying9  65% of buyers use search engines to support purchase decisions10  46% of buyers use social media tools during the buying process -5- € 2012 Adrian Reeve
  6. 6. 4. On which activity do you spend most of your time in a typical month? 40% 35% 30% 25% 20% 15% 10% 5% 0% Managing Visiting or Strategic Leading and Innovation Solving operations speaking development developing problems or with people complaints customersRecent research indicates that CEOs spend the majority of their time with otherpeople: 42% of their time with insiders, 25% with both insiders and outsidersand 16% with outsiders alone. A majority of CEOs spend very little time (lessthan 5 hours per week) alone with outsiders.11How about this perspective? “No one knows what a CEO should do," saysHarvard Business School professor, Raffaella Sadun, who adds, “most of thetime its difficult to codify the qualities of a good manager.”12Given the key issue of a lack of customer orders and the desire to gainadditional customers/revenues it is interesting to note that “managingoperations” is equally scored with customer facing activity. This term may meandifferent things to participants but there is a suggestion of a potentialdislocation in what the leader is actually doing and what he/she should bedoing. It may be, of course, that the role of these individuals is moreoperational. -6- € 2012 Adrian Reeve
  7. 7. 5. How do you feel about the coming year, 2012? 40% 35% 30% 25% 20% 15% 10% 5% 0% Calm & Confident Excited & Motivated Anxious & StressedDespite the pressures of business leadership over the past few years it isencouraging to see this group of business owners and senior managers ispositive about the future. 30% are even excited and motivated about 2012!Indeed if we combine the two positive categories then we find that 70% feel“confident or better” about this year.The flip side is that a significant number is anxious and stressed.As Allan Leighton, widely regarded as one of the UKs top business leaders,remarked recently: “Leadership is tough because you have to make thedecisions that nobody else wants to make and ultimately the responsibility isyours, you can delegate decision making but you cannot delegateresponsibility.”13 -7- € 2012 Adrian Reeve
  8. 8. Conclusions 1. SME owners and leaders have not given up! On the contrary, 70% are positive about 2012. 2. It can be a lonely job being the business owner/leader. Leaders need sounding boards and impartial support which can be achieved through professional associations, the introduction of a Non-Executive Director or peer group networking organisations. How do you gain that external input, advice and support? 3. If increasing (or recovering) customer revenue is the key issue for your business then you need to put plans in place to secure those new customers. This may mean shifting internal resources and personal effort towards this desired outcome urgently. How effective is your marketing and sales effort? Where are you spending your time? Are you in front of prospects and key customers as much as you should be? In 2012 don’t let the urgent crowd out the important! 4. Is your business positioned to take advantage of the inexorable shift to online business? Consider these questions: a. Can new customers find your business on Google, Bing or Yahoo? b. Once they have found you, is it easy to do business with your firm? Are your products/services easy to understand, specify and order? c. Are your online metrics relevant and in place? See below. d. Are you ready for mobile commerce? It’s not coming, it’s here. 5. Are you measuring the right things and in a timely fashion? If you’re not measuring it you’re definitely not managing it; but even if you do have metrics in place they may not be impacting the business. Here are some metrics which will help you navigate the future: a. Online: acquisition, activation, retention, referral and revenue b. Sales: “pipeline” metrics tracking the transition from “leads” to “suspects” to “prospects” to customers (i.e. call activity, qualification, trial, bid conversion, margin) as well as retention, referral & satisfaction c. Financial: revenues, margin, profit, cash, cash flow forecast ********************Adrian Reeve PartnerHamilton Bradshaw Venture Partners60 Grosvenor Street, London W1K 3HZwww.hbvp.co.ukE: adrian.reeve@hbvp.co.ukM: 07887 756 106T: @adrianreeve -8- € 2012 Adrian Reeve
  9. 9. REFERENCES1. $6.3tn wiped off markets in 2011. Financial Times. 30th Dec 2011http://www.ft.com/cms/s/0/483069d8-32f3-11e1-8e0d-00144feabdc0.html#axzz1iIfpLDa52. 2011 Global IPO Review and 2012 Outlook. Renaissance Capital LLC. 21 Dec 2011.http://www.renaissancecapital.com/ipohome/review/2011main.aspx3. HM Treasury. Plan for Growth. March 2011.http://cdn.hm-treasury.gov.uk/2011budget_growth.pdf4. ITEM Club Autumn 2011 forecast. Background: the stalled UK economy. October 2011.http://www.ey.com/UK/en/Issues/Business-environment/Financial-markets-and-economy/ITEM---Background-inflation-and-interest-rates5. UK manufacturing production stagnates in December. Markit/CIPS UK Mfg PMI. Jan 2012.http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=89946. Manufacturing still weak but shows signs of stabilising. Reuters UK. Jan 2012.http://uk.reuters.com/article/2012/01/03/uk-britain-economy-pmi-idUKTRE8020AT201201037. 5 Ways to Keep the Customers You Already Have. Tricia Morris. December 2011.http://blog.parature.com/customerserviceexperience/make-customer-retention-your-new-year-resolution-5-ways-to-keep-the-customers-your-already-have/8. E-Retail Sales Index-retail statistics. IMRG (Interactive Media in Retail Group). Dec 2011.http://www.imrg.org/IMRGWebSite/user/pages/homepage.aspx9. Half of Smartphone owners shop online via a mobile device. eDigitalResearch. July 2011.http://www.edigitalresearch.com/news/item/nid/45733616810. The inside track on buyer behaviour. Buyersphere Report May 2011.http://www.b2bmarketing.net/knowledgebank/event-marketing/features/buyersphere-report-2011-inside-track-buyer-behaviour11. How do CEOs spend their time? Vox Research. May 2011.http://voxeu.org/index.php?q=node/658612. What CEOs do, and how they can do it better. Working Knowledge. April 2011.http://hbswk.hbs.edu/item/6665.html13. Tough Calls: Making the right decisions in challenging times. Allan Leighton. Nov 2011.http://www.londonbusinessforum.com/events/tough_calls -9- € 2012 Adrian Reeve