SME Business Trends for 2024

2023 was challenging for businesses, particularly small and medium sized enterprises (SMEs). Supply chain difficulties, inflationary pressures, recruitment and retention challenges, and a hot of other demands tested the resilience of SMEs across the UK. So much so that many companies struggled to survive. In fact company insolvencies recorded in the second and third quarters of 2023 were the highest witnessed since 2009, according to government data.

However, savvy SMEs who stay ahead of pressing sector trends may be best positioned to increase resilience and thrive in the coming year. Consider the following key trends that are likely to impact SMEs in 2024:

• Generative artificial intelligence (GenAI) Technology continues to evolve rapidly, so embracing digital transformation is more important than ever. One groundbreaking technology GenAI has come to the force with many AI tools to help SME’s streamline processes, create efficiencies and support customers. For instance, tools like ChatGPT can help SMEs effortlessly write product descriptions and AI powered chatbots can handle routine customer questions, freeing up time for more profitable tasks. However the adoption of AI is not without its risks especially as it pertains to data collection and privacy concerns. Additionally 62% of employees say they don’t have the skills to use AI technology effectively and safely. SMEs leveraging AI in 2024 must ensure the technology is rolled out responsibly and employees are trained in both its merits and pitfalls.
• Skills based hiring. Although the persistently tight labour market has begun to display signs of softening, competition for talent remains high and SMEs may still experience difficulties hiring and retaining workers in 2024. According to the federation of small businesses almost a quarter (22%) of small businesses identify a lack of skilled staff as a stumbling block for growth in 2024. TO improve attraction efforts, SMEs may opt for skills-based hiring over traditional recruitment practices. Rather than prioritising job specific qualifications employers who leverage skills based hiring find candidates with the right skills or competency requirements. Focusing on developing soft skills such as problem solving and communication among employees could help SMEs expand talent pools and compete for candidates in 2024.
• The flexible working evolution. The demand for remote, hybrid or other flexible working options looks here to stay. In fact the flexible working bill is set to take effect in 2024, giving employees the right to request flexible working from day one of anew job. As such savvy SMESs are expected to adapt their policies and technologies to embrace flexible working and bolster collaboration.
• Sustainability. Consumer buying behaviour is changing with a demand for products that not only benefit the customer but have a positive impact on the environment. Consequently, sustainable business practices will be a priority for SMEs looking to boost brand reputation and attract customers. Providing fair wages and supporting local suppliers are two simple ways SMEs can be socially responsible in 2024.
• Customer connection. To boost engagement, leveraging technology especially predictive analytics and behavioural data, to create tailored products and customer journeys will be important in 2024, helping SMEs to embed personalisation into every step of their business. However, its important that SMEs are mindful that their connection with customers doesn’t become robotic when implementing technology solutions. There is still a significant demand for human touchpoints, SMEs must ensure their service connects with their customers in a warm “human” way.
• Cyber security. As businesses become increasingly reliant on technology, there is a greater chance of cyber attacks. SMEs with scant resources maybe particularly vulnerable as threat actors might perceive them as easy targets. Investing in robust cyber security measures and training employees on cyber hygiene will be critical for SMEs to reduce losses in 2024.

On the back of a difficult 2023, its critical for SMEs to address working practices to position themselves for the coming year. Embracing AI fortifying cyber security and prioritising sustainability are all ways SMEs can adapt to the evolving business landscape. However it remains important to continually scrutinise both the merits and perils of any workplace practice adoptions. Additionally, robust insurance cover can help protect SMEs for all that 2024 has in store.