Lloyds Bank

  • Tim Hinton, Lloyds Bank

    “Our pledges range from providing clear and transparent access to finance, to helping companies manage and mitigate their risks, to supporting them in overcoming the challenges of a fast-paced business environment”

Sponsor foreword

Small and medium-sized businesses are the bedrock of the UK economy – champions of the great British entrepreneurial spirit.

This report is testament to that, with 1,000 examples of companies to inspire Britain. A thousand companies that make us all sit up and take notice, and wonder whether we could be more innovative, imaginative, efficient or progressive in our own businesses.

London Stock Exchange Group is showcasing this impressive collective, selected from the UK’s diverse pool of vibrant companies – and at Lloyds Bank, we’re delighted to be a key partner in this exciting project.

It’s perfectly aligned to our own pledges of commitment to businesses that will fuel sustainable economic growth. Our pledges range from providing clear and transparent access to finance, to helping companies manage and mitigate their risks, to supporting them in overcoming the challenges of a fast-paced business environment.

Funding solutions are a crucial facilitator of ambition. That’s why we currently provide more than £80bn of funding to businesses, and have pledged to grow our net lending to SMEs and mid-market companies by £6bn over the next three years.

While finance is always the cornerstone of our support, today’s banks have a multi-layered role. We must go further, offering practical insight and specialist expertise that helps businesses to identify, assess and grasp opportunities – wherever they may be.

The truth is, these opportunities are everywhere. This report provides ample evidence of the new and exciting ways British businesses are making the most of them. Prepare to be inspired.  

Tim Hinton, Managing Director, Mid Markets and SME Banking, Lloyds Bank


Unlocking the value of the digital age

The UK is a rich breeding ground for companies that have turned the latest trends and technologies to their advantage. These companies will help to inspire us all to find the true value of the digital age.

Across the UK, companies and organisations are demonstrating the diverse potential applications of digital technology. Cloud services are being used to back up data and support project management, social media is creating a buzz around brands and mobile payments are making life easier for both buyer and seller. Some businesses are even exploring innovative online crowdfunding schemes to complement traditional funding routes. The list goes on.

Opportunities for all

It’s not just the big players who are benefiting. It’s increasingly clear that no business can afford to be left behind the march of new technology – but that also means there are opportunities everywhere.

Businesses of all shapes and sizes are finding ways to leverage the value of the digital age. Some companies could be described as ‘born digital’, such as iomart Group, which foresaw the emergence of ‘the cloud’ and has invested in physical Tier 1 infrastructure, network, people and systems to provide high availability cloud services. Other, traditionally lower-tech companies, are also seeing the benefits. Small traders are reducing their overheads and accessing a broad marketplace through online retail platforms such as eBay and Etsy, for example. In more industrial settings too, progressive manufacturers are deploying all sorts of high-tech solutions, right down to rugged tablets, robust enough for use on the shop floor, to support increasingly smart production processes. But not everyone is making the most of the digital opportunity.

Untapped digital strengths

We do come from a position of strength. The UK’s digital economy is a major source of growth and contributes more to national GDP in the UK than it does in any other G20 country.

Despite this, and the presence of regional clusters of digital innovation in places as diverse as London, Middlesbrough, Manchester and Aberdeen, the full benefits are not being fully realised. Lloyds Bank’s inaugural annual Business Digital Index showed that growing businesses are failing to fully exploit the power of the digital age. The index, which launched in 2014, measures the digital maturity of SMEs and charities in the UK.

Barriers to opportunity

So what’s stopping these businesses? A key barrier appears to be perceived benefits, with over 30% of surveyed organisations stating that being online was not relevant to their business.

Furthermore, according to our report Britain’s Digital Opportunity, which considers what businesses need to do to optimise their potential in a digital economy, 36% of SMEs in the UK have no website. However, of those businesses that have developed their online capability, 51% have reported an increase in sales. That’s a strong indication that growth can be accelerated by encouraging online development.

“51% of businesses that have developed their online capability have reported an increase in sales”

As digitisation continues, this will become a more pressing issue for businesses. Technology moves swiftly and this pace of change will continue. With latest figures showing that 74% of UK adults used the internet to purchase goods or services in 2014 – up from 53% in 2008 – consumer demand for online is high and businesses risk missing the boat.

Many businesses do have understandable concerns about the risks involved with online trade, particularly around cybersecurity. The challenge is to strike a balance between providing convenience and robust protection, for themselves and for customers. Simple steps can help increase security, including maintaining and testing anti-virus software, encouraging password strength, tracking hardware and enforcing rules around staff access to external websites.

Innovation that drives efficiency

Risk mitigation is a concern, but it is one that can be addressed – and the benefits are compelling. Opportunities within the digital economy are vast. Business-to-business relationships, internal processes and management information can all be enhanced by new technology across data analytics, automated reconciliation and up-to-the-minute data streaming.

For example, paper-based, manually intensive, error-prone accounts receivables processes now have accessible and affordable digital counterparts.

  • 74% of UK adults used the internet to purchase goods or services in 2014

Similarly, on the accounts-payable side, digital solutions such as mobile payments or card programmes support greater visibility and control.

Banks play a major role in supporting more streamlined processes for customers and developing cutting-edge solutions. The forward-thinking companies that are embracing digitisation to promote efficiencies are finding that banks are responding by investing in channel innovation. Lloyds Bank is no exception.

Support to realise digital potential

The role of banks is broader than financial technology innovation, too. We also understand the need to support businesses in other ways. As a founder partner of Go ON UK, the UK’s Digital Skills Alliance, we are committed to encouraging and supporting organisations and individuals to understand the benefits the internet can bring. It’s something we take very seriously and we have developed a ‘Digital know how’ guide, available free on our website, to help small businesses establish and optimise their digital strategy. It includes information about online banking, researching and interacting with suppliers, and streamlining administration.

As more and more businesses of all sizes adopt digital solutions to enhance market-facing opportunities or drive internal efficiencies, we will continue to celebrate their success. It’s an inspiration to us all.


Better relationships mean better business

In the business world, the real ones to watch are those that understand the value of collaboration.

Relationships are at the heart of all business interactions with staff, suppliers, customers and support services. Forward-thinking businesses are investing time and resources in building stronger relationships and reaping the rewards that they offer.

Engaging employees

For the majority of businesses, the workforce represents the single highest cost, so getting the most out of that investment is crucial. Keeping your employees happy and loyal helps to future-proof your business. With an estimated 22% of UK job vacancies hard to fill due to a lack of skills, according to the UKCES Employer Skills Survey 2013, this can make a difference to business survival and growth.

Progressive businesses have already recognised the link between happiness and productivity, with happy individuals boosting productivity by an estimated 12%. Multiply that across UK businesses and the potential economic impact is staggering.

Securing supply chains

Relationships with suppliers are also vital. Supply-chain shocks, such as the Japanese tsunami in 2011 and its effects on global production lines, or the scandals affecting the UK food chain, have led savvy companies to place as great an emphasis on their suppliers as their customers. Supply-chain transparency and security are crucial to reputation and growth.

Treating your suppliers well will also help to ensure that your order takes priority in an increasingly competitive landscape. As product demand increases, companies have to meet that demand or risk reputational damage and loss of business.

“Building and maintaining relationships with our customers offers us a deep insight into their businesses”

A more holistic approach to supplier relationships can also help protect your supply chain over the longer term. Meeting the demands of increased orders can place a strain on suppliers, for example; so, as you grow, ensuring that your supplier has sufficient working capital to fund such an increase is essential. One strategy is supplier finance. This allows suppliers to obtain earlier settlement of their invoices, supporting their cash flow and tightening the relationship between buyer and supplier.

Enhancing customer insight

Protecting and growing sales depends on understanding client needs and offering great service. Technology solutions can help. Customer Relationship Management (CRM) systems offer businesses an efficient way to create and maintain customer relationships – and mine data to generate valuable, strategy-informing insights. Great examples of this include some of the major retailers, such as Tesco, which uses data driven by its Clubcard scheme to provide tailored product offers and customer research. Customers are engaged with the promise of a comprehensive ‘rewards’ system.

Although CRM systems can be an affordable solution for companies of all sizes, smaller businesses can engage with their customers without the need for significant investment through social media. As a communication channel, social media is a good way to share information and influence opinion, and smart use can help strengthen relationships. Businesses ignore this at their peril. Engagement allows businesses to reach a huge audience. Disengagement, on the other hand, can lead to your company being overlooked, or to detrimental experiences and opinions being shared far and wide, unchecked.

Building networks

The best relationships work both ways and, indeed, across networks. Many businesses are innovating by exploring joint venture-style agreements, cooperatives or local loyalty schemes, such as the ‘Shop Tameside’ plan which launched in Greater Manchester last year, to reward customers for shopping in independent stores that sign up to the scheme.

Industrial sectors know the value of supporting interwoven relationships to facilitate benefits for all parties, too. It’s central to the success of the Manufacturing Technology Centre (MTC) in Coventry, for example. The MTC is one of seven centres that make up the High Value Manufacturing Catapult launched by the Government to provide a world-class environment to develop and demonstrate new technologies and manufacturing processes on an industrial scale, in partnership with industry and academia. The MTC also seeks to bridge the skills gap in the UK, with the first National Advanced Manufacturing College opening in September 2015.

  • 22% of UK job vacancies are hard to fill due to a lack of skills

Our support for the MTC is much more than just providing banking facilities. We offer lateral thinking about how to engage with other Lloyds Bank clients, through tours and networking events, boosting the MTC’s potential client base and offering our manufacturing businesses access to cutting- edge technology. We have also deepened our relationship with the MTC by providing a £5m grant over five years to support a new Lloyds Bank Advanced Manufacturing Training Centre for engineering apprentices.

Investing time in nurturing new relationships can also help businesses to leverage external expertise that can be as valuable as capital investment. For example, external bodies, such as UK Export Finance, the Business Growth Fund and Scottish Enterprise, offer guidance and support that can make a real difference.

At Lloyds Bank, relationships are the cornerstone of our business. Building and maintaining relationships with our customers offers us a deep insight into their businesses. This allows us to back business ambition more efficiently and effectively. But banking is also a two-way street and businesses should invest in building relationships and trust, to benefit from through-the-cycle support.