SMEs look to homeworking as economy fears grow

Small and medium-sized enterprises can reduce costs and appease employees by embracing home working practices, it has been stated.

Economic uncertainty has characterised 2010 – a year that started with the UK's exit from a six-quarter recession – with each piece of positive news invariably followed by another setback.

Despite some positive signs, such as the 1.2 per cent growth recorded by the Office for National Statistics in quarter two, the sustained economic recovery small and medium-sized enterprise (SME) bosses have been looking for has seemingly not materialised.

And with business services firm BDO reporting a significant fall in business confidence and projected turnover for the remainder of the year, warnings of a double-dip recession are gaining credibility.

It remains to be seen whether the returning grey clouds will develop into a fully-fledged economic storm, but clearly the public spending cuts being instigated by central government do not bode well for 2011.

With this in mind, SMEs will no doubt be looking again at their current expenditure and how to reduce their outgoings. Talk of redundancies may look premature after three consecutive quarters of growth, but companies will certainly be looking to increase efficiency and limit expenditure wherever possible.

One straightforward way of saving money is by scaling back office operations and allowing employees, where viable, to work from the comfort of their own homes.

Advances in technology, particularly the advent of high-speed broadband, mean that location is becoming an increasing irrelevance for companies and organisations, and home working is very much in vogue.

The availability of online collaboration tools and cloud computing means employees can remain in touch with colleagues, clients and managers while working in their own study, potentially hundreds of miles from the main office. This capability is having a major impact on business as we know it.

Clearly the benefits of such a working model are limited if you are a small manufacturer or physical service provider tied to a particular premise. However, for an increasing number of firms it makes little difference where employees are based - providing they have access to the internet.

Reducing costs via home working

From an employers' perspective, any initiative which promises to reduce costs, raise morale and boost productivity is sure to arouse a degree of interest. In this respect, home working looks like something of a no-brainer.

In terms of finance, the model pledges to reduce overheads, lower materials' consumption and optimise office space – having a direct positive impact on the bottom line.

Some employees may even work from home using their own PCs or laptops, rather than those owned by the company, meaning SMEs can reduce the amount they spend on IT hardware and software.

Rather than equipping each individual staff member with their personal workstation, they must simply ensure they have ready access to online collaboration tools and managed services.

As Riverbed Technology's Mark Lewis commented: "There are a number of technologies in place today… where people can not only access remote applications and files but get access to these with ease and speed, as though they were in the same office building."

Other options for cash-starved SMEs include offering flexible working in lieu of pay rises, or in return for additional hours – measures which could serve as a first line of defence in the event of a double-dip.

Should the economy take a turn for the worse, as BDO predicts, having flexible working schemes in place from the outset places businesses at an undoubted advantage.

Raise productivity through home working

SMEs also benefit indirectly by allowing workers to stay away from the office, with lower stress levels, enhanced wellbeing and higher morale all encouraging better performance in the course of their duties.

Rather than being stuck on an overcrowded train at the crack of dawn, or being trapped in a traffic jam, employees can enjoy a leisurely breakfast and drop the kids at school before returning home to switch on their PC.

And come 5pm, workers can be settling down for the evening with a cup of tea, rather than staring out the office window wishing they had remembered their umbrella.

This can undoubtedly help improve their motivation levels and reduce attrition risks, helping to keep recruitment, retention and training costs under control.

Indeed, recent research conducted by IBM suggested that home workers are prepared to put in up to 57 hours per week before buckling, 19 more than their counterparts in the office.

The report noted that homeworkers tend to draw less of a distinction between their work and family time, meaning they spend ever more time concentrating on work duties.

Clearly optimising employee productivity is crucial for employers, and if SMEs and public organisations are forced to reduce their headcounts, it will be vital for those who remain to pick up the pace.

Home working and the environment

Perhaps helping the environment is not at the forefront of every SME owner's mind as turnover dwindles and profit margins are cut, but still, this is a further benefit of home working practices.

The government appears increasingly keen to press home the importance of corporate social responsibility, and by allowing home working, employers act in the interests of a variety of stakeholders.

Ministers recognise the virtues of flexible and home working in terms of relieving infrastructure pressures, as transport secretary Phillip Hammond demonstrated this month when he called on businesses to discourage unnecessary travel.

Speaking at a conference in London, he cited smart working as being one way of cutting carbon emissions and placing UK business on a more sustainable footing.

Video conferencing technology enables businesses to conduct meetings remotely, he noted, which reduces traffic congestion and limits pollution.

And as the cost of fuel – and with it, business travel – continues to increase, more SMEs will surely look to work with their partners, clients and suppliers in this way.

The case for working at home

Ultimately everything comes back to costs – the most important considerations for small businesses, not just during a downturn but in any economic environment.

Business practices have evolved to the extent that many of the expenses traditionally associated with running a business can be avoided, and SMEs act foolishly if they fail to take advantage of this.

Home working may not be a panacea, but it is certainly a vital weapon in the fight against falling turnover, increased costs and economic decline.

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