A new report says UK SMEs have difficulty recruiting the right staff to boost their businesses. So what can they do about it?
Over a third of smaller UK companies are struggling to recruit employees with the necessary skills to help their businesses grow, according to a report from Albion Ventures, a venture capital investor. The report identifies several key skills in the areas of IT, sales and financial management that are either absent or lacking in some SMEs.
This is worrying if you consider the latest figures from the Federation of Small Business (FSB), which indicate that SMEs make up quite a large proportion of the UK workforce. SMEs account for 99.9% of all private sector businesses in the UK, 59.3% of private sector employment and 48.1% of private sector turnover. They also employ 14.4 million people.
SME staff are often forced to be a jacks of all trades, in order to plug skills gaps. Alastair Campbell, managing director of the Ideal Marketing Company, explains: "Many small business owners set up in business to do a specific task that they enjoy or are good at. This means that their strength is usually in their given area; hairdressing, car maintenance and so on. So skills such as sales, marketing or IT are not often something that they bring to the company."
Small business owner Gordon Leatherdale found that he had bitten off more than he could chew when he set up his healthy snacks company, Wild Trail, in 2010. He was doing everything from product development through to sales, invoicing and credit control, but struggled because he had neither the working capital nor the sales expertise to fully exploit the opportunity to become a recognised brand in the health foods market. So he had to get outside help.
A company called The Ideas Factory, an angel investment group, helped him raise equity quickly for professional sales capabilities, an improved back office and accountancy functions. This went a long way towards sorting out many of his problems.
SMEs can also increase their skills from within. There are free or low-cost seminars that offer practical advice, online forums, industry networking groups and websites such Business Link. More importantly, small businesses shouldn't be afraid of getting outside help or training another member of their team to improve key skills.
The introduction of the new Employment Allowance, which will reduce each SME's National Insurance bill by up to £2,000 per business, and Funding for Lending's (FLS) lower interest rates, have gone some way to make it easier for SMEs to access the finance needed to employ skilled staff.
Communication skills are vital also for a small business growth. Valerie Watson-Brown, director of marketing consultancy The Lively Crew says: "I have a bee in my bonnet about the lack of communication skills young people have coming out of education. This results in a lack of the next generation producing competent salespeople. The use of text, email and non-verbal media means that many cannot pick up the telephone and engage in conversation."
Watson-Brown has taken it upon herself to mentor apprentices straight out of education to improve key skills used in business generally, as well as by SMEs.
John Allan, FSB National Chairman, said: "From FSB research of around 1,700 members, we have found small firms believe sales and marketing training would benefit them on the path to growth, but the findings also indicate the value placed on basic numeracy and literacy skills by businesses.
"A determination to succeed and softer employability skills such as communication can be as necessary to grow in business as sales and marketing expertise. With the numbers of firms aspiring to grow at an all-time high, making sure these skills can be found in a business is crucial for these aspirations to be realised."
It is clear from the Albion Ventures report that more education, investment and time needs to be spent to help SMEs employ skilled staff. The biggest skills gaps were found in Greater London (50%) and the West Midlands (40%).
The findings suggest small business owners have to be more alert, and earlier, to any skills shortages in their companies. From that point, coaching or mentoring for themselves or members of their team is a good place to start.
Sign up to become a member of the Guardian Small Business Network here for more advice, insight and best practice direct to your inbox.
Read more here >> The Guardian | Quail eggs
