SMEs, which are defined as businesses fewer than 250 employees, accounted for 60% of all private sector jobs in the UK, a total of 16.6 million.
One of the biggest challenges facing SME’s generally is the non-payment of invoices for services and/or goods
Northern Ireland
In 2019 there were a total of 124.2 thousand small and medium sized enterprises throughout Northern Ireland, a decrease when compared to the previous year.
Northern Ireland has the highest concentration of small and medium sized businesses of anywhere in the UK, making up 99.9% of all businesses and generating around three quarters of all private sector income and employment.
NI SMEs employ 539,000 people and earn £65,998 million in turnover collectively.
Northern Ireland performs well as concerning Innovative SMEs collaborating, but it underperforms with respect to both UK and EU average in terms of design applications.
UK as a whole
At the start of 2019 there were 5.82 million small businesses (with0 to 49 employees), 99.3%of the total business. SMEs account for 99.9% of the business population (5.9 million businesses). SMEs account for three fifths of the employment and around half of turnover in the UK private sector.
More than 76% are single-person enterprises with no employees (4.458 million). Add this to the 1.155 million micro-business (1-9 employees) and it turns out more than 95% of businesses in the UK employ fewer than 10 people.
The construction industry accounts for the highest number of UK businesses (17.68%) although trails significantly behind Wholesale and Retail Trade when it comes to turnover and number of employees.
However, retail is the standout sector. Retail companies make up just 9.33% of all UK businesses but employ 18.4% of private sector workers and generate 33.7% of the turnover generated by all UK industries.
99.9% of businesses in Britain are SMEs and they generate 51% of all UK business turnover.
Earnings of a the average SME? Income margins are often tight, with a third of small business owners taking home less than £10,000 a year.A fifth earn£32,000 or more,while 2pc of entrepreneurs earn at least £150,000.
According to the latest figures from the Office for National Statistics released in November 2019, only 42.4% of businesses started in 2013were still trading five years later in 2018. Almost half of businesses make it to their fourth year (49.3%) while the percentage of enterprises that survive for two years has dropped to 68.3%
Many SME’s have a partial or fully remote workforce, so they will straddle multiple regions.
Issues for SMEs that may be assisted by ADR
One of the biggest challenges facing SME’s generally is the non-payment of invoices for services and/or goods.
Research from the Federation of Small Businesses (FSB) indicates that poor payment practices, such as late payments, affects 80% of the UK’s small business community. FSB also calculates that late payments to SMEs costs the UK economy as much as £2.5 billion every year and causes 50,000 small firms to collapse on an annual basis.
With contactless payments being the favourite way for UK shoppers to pay in-store and the continued growth of online shopping, small businesses need the right technology on board to accept payments in- store, over the phone and online. Of course, these digital payment methods don’t come for free and merchant service providers don’t have the best history of looking after smaller businesses. This has improved a lot in recent years.
According to the 2019 Intuit Cash Flow Survey, 69% of small business owners say they have been kept up at night by concerns about cash flow. We know that late payments are a major problem for SMEs in the UK, but this issue is compounded with the challenges of accurately estimating the running costs of an enterprise – especially in the first year of operation.
According to research from Barclaycard, online shoppers were returning 30% of their purchases to retailers in 2016 with the study saying 60% of businesses had been hurt by the rising trend of online returns. New research from Global Data suggests that online returns in the UK will increase by 27.3% over the next five years (2018-2023).
The worst part is SME’s are probably being charged a penalty by their card payments provider every time a consumer returns an item – just one of the many fees buried into the small print of contracts signed as a business.
Payment firms aren’t the only companies with a habit of throwing extra costs into contracts either. Closely related are banks and overdraft fees are a common complaint among business owners but there are other quirky charges they have to pay – for example, if you don’t have a certain amount in your account or don’t use it often enough.
Any loans SMEs take out will also come with all kinds of small print and additional charges: service fees, guarantee fees, underwriting fees, origination fees and up-front payments.
Support?
All the government stats on SMEs show that small businesses are crucial to the UK economy and more should probably be done to help them thrive, let alone survive. Despite all the challenges facing small businesses in this country, the UK business population is steadily increasing and this is largely thanks to a high birth rate of small businesses.
Getting access to the necessary funds is an obvious barrier for SMEs in Britain and government schemes have largely failed to change this. A growing number of SMEs are turning to alternative finance, such as crowdfunding and business angels to attract the investment they need to grow – and forecasts suggest this will become increasingly common over the next five years.
Figures from the payment firms show small businesses in the UK are still struggling to get paid. Government efforts to reduce the SME late payment deficit are at least making an impact.
Solution?
CCODR provides mediators with the platform to offer mediations to SMEs involved in disputes. Speed and accessibility is of the essence and CCODR meets these demands.
Whilst mediation is not new to these shores, the platform is unique in that it provides the mediator with a complete suite of online tools and as a result they can, in turn, help businesses find a quick and cost- effective resolution to their dispute. This means parties can engage their services remotely and online which is both convenient and cost effective.
In addition, for those who feel they are not in a position to afford legal representation there is no requirement to be represented. Indeed, the process is simple, easy to navigate and a lot less intimidating than litigation.
In all cases, the parties know the costs of the mediator from the outset, allowing peace of mind for the parties that they are not depleting further their businesses cash reserves.
In business when you are faced with a challenge, so many entrepreneurs are experts at facing the challenge and finding a solution- lateral thinking to solve a problem that they can’t seem to get around. A court is not a venue to allow you to creatively solve a problem-but the Mediation process is.
Now with the Court being closed for all but emergency business, many commercial disputes are not being resolved. Joint consultations aren’t being arranged and hearing dates are being put back to an enviable hearing date well after the summer.
Mediation is confidential, the parties are in control, it’s a quicker process and it’s cheaper. A remote mediation will only enhance the advantages to the process. Remote mediation is more confidential, as no one will even see you leave your house. It’s cheaper, as immediately there are no travel costs or room hire costs necessary. More comfort at home, or in the office, inevitably leads to less conflict and a sense of increased control follows from all this.
Recognising that one of the biggest challenges facing SME’s generally is the non-payment of invoices for services and/or goods, the ability to mediate a dispute quickly whilst keeping costs down.
Written by Michael Bready
Michael Bready is a barrister, a qualified and practicing mediator since 2010 and a member of the Chartered Institute of Arbitrators. Michael mediates in all areas and regularly contributes to training and increasing awareness in the mediation field. Michael has a very broad range of experience as a mediator from Commercial/Civil litigation, Wills disputes, family disputes, to professional negligence litigation.
