Indeed, a study undertaken recently by Hitachi Capital Business Finance indicates that business retention is the single biggest issue that worries small business owners on a daily basis and quarter on quarter – and is actually becoming more of a concern, with Q3 2015 recording a 11% increase on the same period in Q4 2014 (35% vs. 24%).The Hitachi Capital Business Finance latest quarterly British Business Barometer found that retention is now much more prominent than other potential ‘worries’ for businesses such as managing cash flow (30%), dealing with red tape (27%) and navigating economic volatility (23%).
The research from Hitachi Capital Business Finance asked 1,000 small businesses across the UK, what issues they are worried about and could keep them awake at night.
Gavin Wraith-Carter general manager at Hitachi Capital Business Finance (pictured above) explained that at a time of increased competitiveness, the challenge for any business is how to focus on retention while also looking for new avenues for growth.He told Asset Finance International: “Other concerns such as red tape are also on the rise. Despite commitment by the government to save businesses £10 billion in red tape to boost productivity and keep the economy growing, the research suggests that this has not alleviated the worry for SMEs, and it has actually increased significantly from last quarter (27% in Q3 2015 vs. 15% in Q2 2015, an increase of 12%).
Top 5 concerns compared with six months ago (Q3 vs. Q1 2015)
| Q3 2015 | Q1 2015 | |
|---|---|---|
| Business Retention | 35% | 25% (+10%) |
| Managing Cash Flow | 30% | 22% (+8%) |
| Red Tape | 27% | 15% (+12%) |
| Compliance & Regulation | 25% | 16% (+9%) |
| Economic Volatility | 23% | 20% (+3%) |
Wraith-Carter highlighted the other concerns revealed in the research:
Managing cash flow:
“Although cash flow is a constant concern, the number of SMEs citing this as a major issue is on the increase from last quarter (30% in Q3 2015 vs. 22% in Q2 2015)”.
Red tape:
“Concerns around red tape appear to be on the up (27% vs. 15% in Q2 2015). This anxiety is apparent across all industries with the only exception being the construction industry, where it appears to be less of a concern (21% vs. 27% in Q2 2015)”.
Economic Volatility:
“With the economic uncertainty in China and closer to home in Greece, concerns around the economy are a continued concern for SME and is up slightly on last quarter (23% vs. 20% in Q2 2015)”.
Wraith-Carter added: “Running a business, regardless of size or sector is a constant challenge and business retention is certainly going to be at the front of peoples’ minds. There is always a danger that corporates rest their laurels on the last deal done and neglect developing longer term relationships with their customers.“In recent times brokers have tended to fill this gap in the asset finance sector and worked at getting to know their clients on a more intimate basis. In a bigger picture they can serve to form a bridge between companies and their clients.“However, as the economy pulls out of recession and companies go for growth it is crucial for them to work at establishing longer-term relationships with their customers. There are now a lot of opportunities, including via technology, to ‘get in front of the customer’ and add value by saying ‘how’s it going, and what else can we do for you?’”
He stressed: “If you generate a partnership with your customer you will retain them – if you merely complete a transaction you won’t.”
Gavin Wraith-Carter added: “There are of course, a plethora of business related issues that SMEs have to juggle on a daily basis, including managing cash flow and having a some foresight on the issues such as the economy, both in the UK and abroad.
“By anticipating these issues, we can work with our introducers to offer solutions that can help people navigate the challenges of being a business owner and, hopefully taking some of the ‘worry’ away”.
The Hitachi Capital Business Finance British Business Barometer also revealed other sector highlights:
Manufacturing:
Managing cash flow is the biggest concern for the sector (45%), and has been the same for the last 12 months. This is followed by business retention (43%), both up significantly on last quarter (18% in Q3 vs. 26% in Q2 2015). Red tape and regulation is also up significantly on Q2 2015 (37% Q3 vs. 27% in Q2 2015). This sector is also keeping an eye on the economic outlook (33% Q3 2015 vs. 22% in Q2 2015).
Construction:
The issues keeping SMEs in this sector awake have changed significantly in the last six months. Whereas last quarter, managing cash flow was the biggest concern in Q2 2015 (27%), this has dropped to 21% this quarter. The biggest concern is now around red tape (29%) and compliance issues (27%).
