Skills gap hindering SME growth

A new study reveals that over a third (36%) of the UK’s smaller companies admit that a shortage of skilled staff is hindering their growth prospects.

The Albion Ventures Growth Report 2013, which examines the challenges and opportunities faced by 450 SMEs with a combined turnover of over £1.6 billion, shows that the biggest gap in the small business skillset is in sales, reported by one in six (16%) of respondents.  A lack of IT (12%) and financial management (10%) expertise came in second and third places respectively.

The biggest skills gaps are found in the two most intense business conurbations: Greater London (50%) and the West Midlands (40%).  Businesses in these regions face the toughest competition to hire the right staff.

The study also shows a clear divide in perceptions between business owners that are optimistic and pessimistic about their future growth prospects: one in five (20%) of optimistic business owners cited a sales skill gap compared to just 4% of pessimists, strongly suggesting that the former are more focused on getting their products and services out to potential new customers. Conversely 21% of pessimists identified cash management as their biggest skills gap, twice as many as the optimists (11%) – a strong indication that pessimists are more concerned about keeping day-to-day cash flow moving.

On a sector basis, firms in the manufacturing sector reported the most difficulty in finding skilled staff (41%) followed by Services (35%) and Retail and Distribution (33%).

Skills shortages among UK SMEs

Sales 16%
IT 12%
Financial Management (cash management) 10%
Research & Development 9%
Human Resources/ CSR 8%
Business Planning 8%
Operations 3%

While the majority of firms are confident in their management’s abilities the report highlighted how a lack of management ambition is most likely to be cited among larger SMEs with a turnover of over £20 million.  Having made it through the initial stages of growth the findings suggest that many are comfortable staying at this size and lack the ambition to expand any further.

Patrick Reeve, Managing Partner at Albion Ventures said: “it’s a real concern that so many small firms are running into skills shortages at a time when the economy is picking up and recruitment is heading back up the agenda.  These findings provide a clear guidance as to where the biggest skills gaps reside and it’s vital these are addressed.

“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: “The UK’s economic recovery relies in large part on a thriving SME community.  To continue to improve the policy mix it’s vital that we develop an intimate picture of what is preventing small businesses from growing. While a shortage of bank lending is clearly a factor, it appears to have received a disproportionate level of attention at the expense of plugging skills shortages.  The appetite for growth is there in the UK economy, but we must stop putting hurdles in our own way.”

http://www.onrec.com/news/news-archive/skills-gap-hindering-sme-growth?dm_i=C5N,1VZ1S,44H6K8,6RQ7S,1

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