5 challenges facing SMEs in 2020

SMEs form the backbone of the UK economy.  More numerous and more varied than you would imagine, these companies face all of the challenges their larger counterparts and competitors do, without the benefit of scale.

So, what are the key challenges that should be front of mind for decision-makers and business owners across Essex small to medium businesses?  This article looks at the employment law changes coming into effect in April plus a gentle reminder about Brexit.


Firstly, let’s briefly talk about Brexit.  The UK have now left the EU.  If you employ an EU National, it is worth reminding them to apply for settled status before the 30 June 2021.  You can find out more or share this link with your employees to provide them with some guidance.


From the 6 April, as part of the Government’s Good Work Plan, the law will change.  Every employee and worker will have to receive a written Statement of Terms from day 1 of employment.  Now is the time to start to review your recruitment processes and specific paperwork to ensure you comply.


From 1 April, the national living wage, or rate for adult workers aged 25 and over, will increase from £8.21 TO £8.72.  All other rates are also set to get higher, which has been labelled the ‘biggest ever cash boost’ for UK workers.  Great news for employees, but these increases will undoubtedly place a higher burden on smaller businesses across Essex.


This is a completely new law which is expected to come into force in April 2020.   The Parental Bereavement Leave and Pay Regulations, which will be known as Jack’s Law in memory of Jack Herd whose mother Lucy campaigned tirelessly on the issue, will implement a statutory right to a minimum of 2 weeks’ leave for all employed parents if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy, irrespective of how long they have worked for their employer.  We will share more information on this new law once we have a final date.  For more information you can read the press release here.


Effective from 6 April 2020, this change in the holiday pay reference should look to even out the variation in pay for workers, particular those in seasonal or atypical roles.  The holiday reference pay period will increase from 12 weeks to 52 weeks.  So, all employers will be required to look back at the previous 52 weeks where a worker has worked and received pay, discarding any weeks not worked or where no pay was received, to calculate the average weekly pay.

UK SME Data and Statistics

Small businesses account for 99.3% of all private sector businesses in the UK, according to the Federation of Small Businesses (FSB).  More than 99% of the 5.9 million private businesses are small or medium sized (SMEs).

SMEs are defined as businesses with fewer than 250 employees and account for 60% all private sector jobs in the UK, at total of 16.6 million making SMEs crucial to the UK’s economy and their contribution is increasing every year.

The South East are above the UK average for the highest ratio of SMEs with London boasting the highest.  This means, roughly a third of all UK businesses are located in London or the South East.

According to a monthly survey of businesses conducted between Feb 2016 and Jan 2018 by ‘Factworks’, attracting customers is the biggest challenge for UK SMEs with 79% of businesses surveyed in 2018 listing it as their biggest concern.  Of course, this isn’t a new challenge for businesses but the nature of attracting customers has changed drastically over the past few decades and it’s clear many businesses are still struggling to make the most of new opportunities and overcome new challenges.

Unsurprisingly, ‘retaining and recruiting skilled employees’ is also highlighted as a challenge for SMEs.  A recent survey of 1000 SMEs has found significant regional disparities in recruiting and retaining skilled staff, with London a lonely outlier.

This uneven distribution of talent impacts businesses within the South East and Essex and it can take months to find suitable candidates with many SMEs now relying heavily on a temporary workforce to plug gaps.

We’ve listed a few key things SMEs can do to recruit and retain a skilled and happy team below:-

Company Culture

Strong company cultures are strategically created, built from the top down and nurtured over time.  When you build value-added culture from the very beginning of the business existence, it allows you to attract passionate and talented employees.  A strong company culture includes being better positioned to retain high-impact employees for years to come.


Define key milestones at the beginning of each quarter then allow your hardworking and talented employees to work with their colleagues to achieve your set business goals.  Once they know what is expected they will feel empowered.  Remember to make sure they have the tools to thrive in their role, whether it is technology, training or intra-office communication.

Identify employees at risk

There are some key risk factors that can help you immediately identify high risk employees:


  • Length of time since last promotion;
  • Tenure at the company;
  • Last time the employee received training;
  • Change or role or job duties.


We are not talking about plants in the reception and hand cream in the bathroom –  but that would be nice! 

It is more about providing flexible working; staggered hours and a solid rewards package.  That way, your employees become part of your brand and will be happy to shout out about how great it is to work for your company.

be flexible

A business may have a number of workers starting and finishing at different times, enabling the business to be operational over longer periods of time.  This works well for busy Call Centres and Manufacturing Companies. 

Flexible working and home working also helps keep your teams motivated! 

be competitive

45% of talented employees who quit, say their main reason is salary.  However, a knee jerk reaction is not always needed to pay all your talent more.  The best way to address this is to consider whether you are paying below industry standards.  If that is the case, then introduce a staggered approach and be transparent with your employees.

If you would like some advice on the key challenges facing your business.  Or would like us to help you recruit fresh talent for your business, then get in touch with our Director, David Noble today on 01268 762430.

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