New research from Slack and Be the Business reveals that AI could be the key to overcoming barriers for growth - as Britain has been dubbed a ‘stagnation nation.’
Despite two-thirds (63%) of SMBs in the UK growing in 2023, 58% fear that they will stagnate in 2024 due to inflation, the cost of living crisis and poor management.
UK firms find the most challenging stage of growth is when they reach more than 25 employees and go beyond £100,000 revenue. Action is needed to sustain growth beyond this and, in the report, companies point to a range of internal and external conditions that would help them achieve it.
From collaboration to AI: SMB growth gateways in the UK
SMBs also identified several internal issues that hinder growth - and these are where savvy leaders can take action to build their own growth gateways.
Poor management was the top internal barrier to growth, highlighted by over four in ten (45%). This was followed by:
- Poor communication and lack of collaboration - 38%
- Lack of motivation - 36%
- Employee burnout - 33%
These barriers are likely connected: poor management and communication fuels a lack of motivation and employee burnout. In contrast, bolstering collaboration and communication skills, and deploying tools that support better engagement, can improve growth prospects.
In fact, the relation between communication and growth is clear: 88% of organisations that rate their communication as ‘excellent’ felt optimistic about growth prospects - compared to just 47% who rate their communication as ‘poor’. Meanwhile, 85% of all SMBs agree that when scaling their business, communicating clearly is vital to successful growth.
Alongside improving collaboration, a further gateway to growth lies in deploying automation and AI, according to UK SMBs. Almost a quarter (23%) say that they will invest time and/or money in AI to stimulate growth in the year ahead - showcasing the appetite SMBs have for using new technologies to supercharge their work.
Louis O’Connell-Bristow, CEO & Co-Founder of Homemove, for instance, explains his team built an AI-powered assistant to coach the sales team with Slack messages. “It shows the amount of sales we have, what our targets are, and then says something like ‘come on guys, let’s get to 7k today!’ By adding some humour, it’s building a culture that drives the sales people forward.”
How can AI save UK businesses from stagnation?
Businesses looking to grow in 2024 will see AI as a surefire way to level up key parts of their business. Some options include:
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Data Analysis and Insights:
- AI can process large datasets quickly, providing valuable insights for decision-making.
- Predictive analytics can help businesses anticipate trends, customer preferences, and market changes.
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Process Automation:
- Robotic Process Automation (RPA) powered by AI can automate routine and repetitive tasks, increasing efficiency.
- Automation can reduce operational costs and free up human resources for more strategic tasks.
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Personalized Customer Experience:
- AI enables businesses to analyze customer data and provide personalized recommendations and experiences.
- Chatbots and virtual assistants powered by AI can enhance customer service and engagement.
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Supply Chain Optimization:
- AI helps in optimizing supply chain operations by predicting demand, managing inventory efficiently, and identifying potential disruptions.
- Improved logistics and supply chain management contribute to overall business agility.
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Enhanced Decision-Making:
- AI algorithms can analyze complex scenarios, providing decision-makers with data-driven insights.
- This can lead to quicker and more informed decisions, reducing the risk of stagnation due to indecision.
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Innovation and Product Development:
- AI can aid in research and development by identifying patterns and suggesting new ideas.
- Accelerated innovation through AI can help businesses stay competitive in rapidly evolving markets.
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Employee Productivity and Satisfaction:
- AI tools can assist employees in their tasks, boosting productivity.
- Predictive analytics can help identify potential employee burnout, enabling proactive measures to maintain a motivated workforce.
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Cybersecurity:
- AI can enhance cybersecurity by detecting and preventing potential threats in real-time.
- Protecting business assets and data is crucial for maintaining stability and growth.
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Market Analysis and Competitive Intelligence:
- AI algorithms can analyze market trends, competitors, and consumer behavior to guide strategic planning.
- Businesses can stay ahead of the competition by leveraging AI for market intelligence.
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Adaptability to Change:
- AI-driven insights can help businesses adapt to changes in the market, regulations, or consumer preferences.
- Enhanced adaptability ensures businesses can respond effectively to challenges and opportunities.
Cultivating an environment that nurtures SMB growth
Inflation and the cost of living is highlighted as the biggest barrier to growth in the data - selected by over half (55%). This was followed by competitors (31%), and the ongoing impact of Brexit (26%) - showcasing the wide range of SMB concerns.
Turning to solutions that would help the UK become a better place for growing SMBs, decision-makers highlighted both policy and cultural shifts:
- Tax cuts - 46%
- Strong training/education/upskilling programmes - 43%
- Better work life balance - 40%
These provide potential focus areas for both businesses themselves and wider stakeholders to drive growth, for example, by addressing the demand for investment in skills that will help the SMB community to thrive. However, the research also reveals areas in which SMBs can take internal action to stimulate growth.
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Methodology
The survey was conducted among 500 UK decision makers in organisations with between 1 and 250 employees from a range of sectors. The interviews were conducted online by Sapio Research in November and December 2023 using an email invitation and an online survey. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.4 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample. Sample was selected from Online partner panels.
