While two thirds (64 per cent) of Britain’s small-medium enterprises (SMEs) report their business has not expanded in the last three years, this stunt in growth hasn’t impacted their sense of optimism. In fact, almost seven in ten (69 per cent) say they feel their business has potential for growth if they can overcome certain barriers.
PayPal’s 2024 Business of Change report reveals nearly half (47 per cent) of UK small businesses plan on scaling in the next one to two years, yet 43 per cent worry technical expertise gap could hinder growth. Surveying 500 small business owners across the UK, the study uncovers that although more than half (62 per cent) agree online sales are key to expanding their business, 51 per cent say that setting up their business has been harder than they thought.
Barriers to growth
The report explores key barriers that Britain’s small businesses surveyed called out including:
- The challenging economic landscape (38 per cent)
- Consumers purchasing less (37 per cent)
- Competition in the industry (35 per cent)
It isn’t just external factors that business owners feel will limit their ability to expand – they feel a lack of business confidence and skills will hold them back. In fact, 28 per cent of business owners say they lack confidence with online and social media marketing, and 24 per cent say they struggle with making their website safe and secure for shoppers. Further, 17 per cent say they aren’t sure which payment methods to offer, such as installment payment options like buy now, pay later or digital wallets that consumers prefer to pay with.
In the global arena, more than one-third (32 per cent) of UK small business owners lack confidence in international sales, with over half (55 per cent) not planning cross-border expansion soon.
The Cyber Security Breaches Survey of UK businesses2 in 2023 noted that the average (mean) annual cost of cybercrime for businesses is estimated at approximately £15,300 per victim. Amidst cybersecurity threats, the hustle for Britain’s small businesses intensifies. Nearly a third (29 per cent) of businesses surveyed admitted to feeling unprepared to shield their business and customers from fraudulent transactions, while 31 per cent fret over safeguarding customer data online.
Looking ahead
On an encouraging note, almost half of those surveyed (49 per cent) believe the future is bright for UK SMEs. When asked about their short-term business goals, increased revenue (61 per cent), building customer loyalty (27 per cent), and increasing checkout conversion (23 per cent) were top of the list. Revamping their website or online commerce platform was another top goal for a fifth of business owners (20 per cent).
Testament to their belief that digital transformation will be key to their future growth, SMEs say that in 2024, they will be investing in areas such as improving their online and social media sales (79 per cent). A majority (57 per cent) of SME owners recognize that unlocking the power of technology and Artificial Intelligence (AI) skills is pivotal for sustained long-term growth, as they navigate the dynamic landscape of advancing technology.
Other areas where businesses surveyed will invest more in 2024 include marketing (50 per cent) and increasing and improving their customer support services (20 per cent). Almost half (49 per cent) of UK SMEs surveyed also believe that giving shoppers more choice in how they pay will be important in helping them turn prospects into customers and grow sales.
Vincent Belloc, managing director, PayPal UK, commented: “With technology evolving rapidly, staying ahead in business can be tough. Managing the complexities of acquiring new customers locally and internationally, and managing fraud and disputes add to the challenge. Yet, it’s promising that many British small business owners are aware of the necessary changes for scaling up in 2024. Our new solution, PayPal Complete Payments, aims to remove some of their prominent barriers and promote growth.”
For more information on PayPal’s suite of online payment solutions for small businesses, click here.
