New Breed of "size zero" SMEs emerge

The report, ‘Collaborate UK', highlights the new strategies being followed in response to the downturn, revealing a significant cultural shift among the dynamic SME community and the emergence of a new breed of leaner, more focused ‘size zero' businesses.

It found that a quarter (24%) of the 700 SMEs surveyed are now more open to working with other businesses than they were before the downturn and 14% now work with more partners as a result.1 in 8 would even team up with a competitor if there was a business benefit.

The report identifies the emergence of a new breed of "size zero" businesses - organisations that are stripping out non-core functions by embracing outsourcing, exchanging services and sharing expertise, so that they can focus on their strengths.

• Smart outsourcing - 2.8 million SMEs have embraced outsourcing, buying in a mean of five non-core business functions. Among this group, the projected mean spend on outsourcing in 2013 is £143,000 with 18% planning to increase it, while the biggest spenders can be found in the East of England, where SMEs plan to spend an average (mean) £203,000.
• Exchanging services - nearly half a million SMEs are engaging in a ‘bartering' economy, by trading their services with other businesses in lieu of payment. Wales is leading the way, with 16% of SMEs there saying they have contra deals in place
• Sharing expertise - over a quarter (28%) work with other businesses to obtain sales leads and win new business while 22% share best practice with other businesses. A huge 28% of businesses in Yorkshire and Humberside would even consider working with a competitor (compared to the national average of 12%)

      These smarter ways of working have perhaps contributed to a feeling of cautious optimism among SMEs as they look to create over 400,000 new jobs this year, with the West Midlands showing the biggest signs of optimism and the North East the lowest.

Professor Robert Blackburn, Director, Small Business Research Centre, Kingston University, comments on the findings: "This more open, collaborative culture not only strengthens the capabilities, flexibility and efficiency of SMEs but has a wider economic benefit, stimulating more opportunities for enterprises as ‘suppliers.'"

Patrick Gallagher, CEO of CitySprint comments on the report, "By sharing expertise, exchanging services and embracing smart outsourcing, SMEs across the country are successfully stripping non-core functions out of their businesses. This is creating a new breed of leaner, "size zero" businesses, able to focus on their core area of expertise whilst tapping into their networks for everything else, as and when they need something."

Gallagher concludes: "Our report shows that far from feeling isolated during the economic downturn, there are real opportunities for new intra-SME contracts across the sector and country and a real sense of optimism. Through the work we do, it has been really fascinating to see businesses seize this opportunity and, in many cases, play a part in it."