Exploring the new landscape for SME FDs

Despite lobbying by industry groups and recent government action to reduce the level of red tape facing UK business, the credit crunch has brought into sharp focus the very real economic pressures faced by small to medium enterprises (SMEs) in particular. Recent employment legislation has placed a disproportionate burden on the SME, according to the University of Nottingham's Institute of Enterprise and Innovation, and unfortunately this trend looks set to gather pace rather than reverse. In fact, many SMEs are making a conscious decision not to grow because of the legislative regime in which they operate. The knock-on effect of this is a lack of innovation, a slow-down in job creation and unfulfilled potential to boost the UK economy. This landscape, combined with other pressing issues such as cash flow, taxation and skills gaps paint a bleak picture for the financial director (FD) to cope with. But in reality, is the picture really as bad as the pundits state? Recent research commissioned by Pegasus Software2 highlights that economic slowdown is the biggest pressure facing SMEs in 2008. So how should FDs address the current squeeze and navigate the redtape whilst fighting upward pressures on costs?