Despite the downturn, our small and medium enterprises (SME) sector is a vibrant and resilient force within the UK's wider business community. It is in our best interests to keep it that way; this is the 'economic engine of Britain' contributing over 50% of GDP and employment (according to Backing Small Businesses, a 2010 report by BIS). Moreover, according to our research, some of the smallest companies reported growth of over 10% in the last six month. That is even more impressive when you consider these organisations are exposed to the same external forces as large companies, but without the comfort of a global network and valuable economies of scale.
With a New Year come new challenges - further economic uncertainty, banks raising the bar in terms of eligibility for loans and cuts in government spending. Nonetheless, our research also reported SMEs are aware of the need to prepare. Around a third of businesses we surveyed are still optimistic about the state of the economy in 2012. In the coming year, this group expects to grow. So what about the remaining two thirds? How do we give them the tools they need to walk a path to prosperity?
This research has proven invaluable in terms of helping us get to know the needs of this community better. The need for advice is a key focus for small and medium sized businesses, particularly around subjects such as financial management, taxation and business regulation. Over half those surveyed noted a need for advisory services to make critical decisions, with business advice groups (51%) and work colleagues (46%) being the most popular sources. Interestingly, for sole traders other small business owners were the most important source of help and advice, suggesting a community approach is best in terms of sharing best practice.
When they have time, SMEs are often the more innovative users of social media tools - given limited marketing budgets. As such, the likes of StartUp Britain and the LinkedIn Business Answers community is provided as a way of connecting entrepreneurs and supporting their networking efforts. Similarly networking in real life (if business leaders can get away from their desks) is just as crucial.
Looking at the SME community and their needs also involved the discovery of persistent problems that urgently need solving; cash flow is a major issue; recent research revealed that SMEs are owed over 30 billion pounds in late payment. Bacs, the company that commissioned the research, stated that the figure was a rise of 10% over the last year, and the highest since records began in 2007. It is with this in mind that HP has signed up to the Prompt Payment Code, one of the first few large technology companies to take this crucial step. We call upon other large companies to follow suit and make it easier for smaller enterprises during this difficult time.
While we applaud UK government for its focus on using more SMEs as suppliers, it can be a challenge for companies to navigate the complexities of government procurement. Therefore, getting SMEs integrated into public (and private) sector supply chains with larger systems integrators can open the door for SMEs. To us they bring new ideas and a fresh perspective as well as crucial innovation. Big companies do not have a monopoly on the best ideas.
We're introducing initiatives that we hope will support SMEs in making their optimistic plans become real. As the UK's largest technology company, HP is already using over 600 SMEs within our supply chain and over 8000 partners who help us bring technology to customers. But we have our sights set on working with even greater numbers in future, adding a further 150 SMEs to our supply chain and increasing spend with them by 50% by the end of next year. We're also appointing an SME Champion who will bring even closer alignment between the goals of HP and the needs of that community, a task which spans providing better advice and support, improving our procurement process, developing a new approved SME supplier list, creating 'SME bootcamp' events and rewarding excellence amongst SMEs through the HP Business Answers Awards programme. And we'll be unveiling further initiatives throughout this year.
HP is dedicated to driving SME profitability and success. Working together, SMEs and larger enterprises can bring the innovation potential that technology can deliver to drive the economic growth as well as help transform public sector services to benefit everyone, perhaps even the Chancellor.