Red Tape, Regulation & Finding Skilled Staff as Biggest Obstacles To SME Growth…
Small businesses’ growth prospects are being stifled by difficulties in finding skilled staff, according to a new report2 by Albion Ventures, one of the largest independent venture capital investors in the UK.
The report, which examines the challenges and opportunities faced by 450 SMEs with a combined turnover of £1.6 billion in growing their business, reveals that a lack of access to skilled workers ranks second in their perceived barriers to growth behind a ubiquitous aversion towards regulation and red tape.
Regionally, small firms in the Midlands and Wales are most likely to face a skills shortage with over one in five (22%) saying this posed a high risk to their growth ambitions. Businesses in East Anglia were the most confident in their abilities to recruit skilled staff reported the lowest level of concern, followed by Scotland.
On a sector basis, companies in the retail and manufacturing industries found it most difficult to find skilled staff and those in construction and business services had the least difficulty.
The report shows a stark contrast in how companies that are optimistic and pessimistic view their barriers to growth: optimists are almost twice as concerned as pessimists with their ability to find skilled staff, possibly because they are more likely to be hiring.
In terms of size skill shortages are most acutely felt by small firms with up to five employees, suggesting that experienced workers are more likely to be drawn to larger, established companies.
However, pessimists are far more likely to blame outside factors such as regulation – with employment law their main gripe – and red tape than optimists, who tend to treat it as one more occupational hazard to be managed.
| Biggest challenges to growth |
Rank |
| Red tape and regulation |
1 |
| Difficulty in finding skilled staff |
2 |
| Lack of access to finance |
3 |
| Difficulty in accessing new markets |
4 |
| Pace of technological change |
5 |
| Scale of management ambition |
6 |
| Technological limitations |
7 |
| A lack of management expertise |
8 |
| Absence of business mentoring |
9 |
Patrick Reeve, Managing Partner at Albion Ventures said: “While 60% of small businesses expect their business to grow over the next two years, few think it will be an easy journey. It’s no surprise that regulation and red tape rank as their biggest bugbear but it was less expected to find such a high portion of small firms struggling to find the right people, particularly compared to other sources of concern such as a lack of access to finance.
“The Chancellor’s decision to reduce National Insurance contributions of up to £2,000 per business has been a welcome move for those firms looking to hire new staff but it does not deal with the challenge of finding them in the first place.”
Cormac Hollingsworth, Director at New City Network comments: “This report providing a guiding perspective on policies already being introduced by the Government, such as for example, introducing the ‘One-in, Two-out’ where every new regulation that imposes a new financial burden on firms must be offset by reductions in red tape that will save double those costs. Fostering a more skilled workforce across the UK must also be a focus not only for Government policy but also a key mission for Universities and colleges too.”
Go to the main page
Tags: Birmingham, birmingham business news, Business, Business Events, Business Information Portal, Business News, Business startup, businesses, Coventry University, economy, employment, Entrepreneur, Entrepreneurism, entrepreneurs, Government, Graduate, graduate internships, graduate recruitment, investment, london, Manufacturing, mployability, News in Brief, Small and medium enterprises, Small Businesses, SME, SMEs, Students, tax, technology, The BIP, UK, West Midlands, West Midlands BIP, West Midlands Business News
