2023 will be remembered as a year that presented an array of business challenges for SMEs, with factors such as economic uncertainty, geopolitical tensions, and the evolving dynamics of hybrid work models significantly impacting the business environment.
Anticipating the future involves considering these ongoing business challenges, while also staying attuned to emerging trends and potential shifts in the global economy.
SMEs will need to adapt and innovate to navigate the uncertainties and opportunities that 2024 might bring.
So, as we look towards 2024, the question arises: what business challenges can SMEs expect in this new year?
Business Finance in 2024
The funding landscape for SMEs in 2024 appears challenging. Banks are showing a reduced appetite for lending and implementing more stringent credit checks, leading to decreased access to capital for SMEs.
This trend was already evident in late 2023, with two-thirds of SMEs experiencing greater difficulty in securing finance from high-street banks compared to 2022.
Additionally, the high-interest rate environment is expected to persist, increasing the cost and risk of debt for those who do manage to obtain bank funding.
In contrast, the decline in traditional bank lending is being partially offset by the rise of alternative lenders, who have shown an exponential increase in lending activity.
These lenders have emerged as a vital source of finance for SMEs, providing a much-needed lifeline in a tight credit market.
If you’re a business owner or director seeking additional finance in 2024, it would be prudent to explore alternative lenders better suited to funding SMEs.
Artificial Intelligence (AI) Systems and Tools
A couple of years ago, AI seemed a distant tool for larger corporations; it has now become a crucial and current consideration for SMEs.
The rise of accessible AI products offers these businesses a path to digital transformation.
In this day and age, it’s important for SMEs to invest in suitable AI solutions that can enhance their capabilities, streamline operations, and elevate customer experiences.
As AI continues to democratise, SMEs face the challenge of embracing these technologies to avoid stagnation and remain competitive.
SME Net Zero Ambitions
In 2024, SMEs will increasingly focus on achieving net zero, driven by the demands of larger partners in their supply chains.
Despite previously lagging behind larger companies due to resource constraints, SMEs are now recognising the importance of having a net zero policy, especially when bidding for government contracts.
To achieve this in a cost-effective manner, SMEs are expected to leverage government grants, knowledge hubs, services from third-party providers, and innovative technologies that streamline carbon footprint tracking.
This shift marks a significant step towards environmental sustainability in the SME sector.
Supercharge Your Sales Engine
In 2024, UK SMEs must innovate their sales strategies to overcome the stagnation caused by various economic and geopolitical factors.
Key focus areas include:
- Elevating marketing and customer service initiatives
- Empowering employees with targeted training and development programmes
- Refining sales processes for efficiency and effectiveness
These adaptations are crucial for SMEs looking to navigate a challenging economic climate and seize growth opportunities in the upcoming year.
Talent Management and Workplace Culture
In 2023, about a third of businesses faced worker shortages, and this trend is expected to continue into 2024.
SMEs particularly struggle with recruitment and retention as they compete with larger employers who have more substantial budgets and stronger brand recognition.
Post-pandemic, many SMEs adopted greater flexibility in work arrangements to attract talent.
However, maintaining a cohesive company culture and ensuring productivity with a largely remote workforce remains a significant challenge.
These issues highlight the need for SMEs to innovate in their approach to culture and talent management in the coming year.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
