SMEs: You Have The Power
“Small firms are the lifeblood of the Welsh economy, representing 99% of all registered businesses.” [1]
The importance of SMEs to the economic development and prosperity of Wales cannot be overstated. Governments are acutely aware of the importance of a thriving private sector, and the recent publication of the UK Government’s Industrial Strategy and the Welsh Government’s Economic Action Plan signal a welcome emphasis on addressing the critical economic challenges facing small and larger businesses.
It is worth noting that the modern SME is quite different from that of previous times. Today, we are witnessing the sheer pace of scalability of SMEs and how they can rapidly make a meaningful contribution to their local economies.
Business growth, of course, depends on many factors, not least their ability to weather differing economic conditions.
“It is impressive – but not surprising – to see that almost 70% of small and mid-size quoted companies remain optimistic about their business prospects over the next 12 months, in a post-Brexit context. There is a habitual optimism amongst smaller quoted companies. They tend to be sheltered from political and economic storms due to their ability to adapt to challenging circumstances and turn any potential threats into opportunities.” [2]
As the graph below indicates, over recent years the level of corporate borrowing has been on a gradual upward trajectory. As a measure of the health of the economy, this points to an increase in start-ups and a possible growth amongst existing enterprises.
(Woodford funds, 2017)
The rise of self-employment
The UK does not appear to be short of entrepreneurial flair, which over recent years has translated into more company start-ups and a rise in self-employment.
“The significant rise since 2008 means that self-employment is at its highest level in 40 years, and now accounts for 15% of the UK workforce, up from 12% in 2000 and 8% in 1980.” [4]
However, despite the growth in the numbers, there are concerns that many of these businesses may not be providing robust employment opportunities within their local communities.
“The proportion of businesses that employ people has fallen since 2000 from around a third, to around a quarter. This decline in the number of employers as a proportion of all businesses is due to the growth in self-employment.” [5]
However, the tough economic times have meant that governments have been under enormous pressure to maximise cost savings wherever possible; savings which have, no doubt, been felt across large parts of the SME community.
In rural areas of Wales, for instance, “the lack of support for local companies… has led students who had left for University to consider work opportunities in the cities rather than return to rural areas leading to further depopulation and brain drain.” [6]
More widely, many businesses have struggled to navigate their way through the challenging economic conditions, unaware of their options to increase employee headcount and grow their operations.
Business survival rates
With SMEs being such a key contributor to the prosperity of regional economies, recent data on survival rates makes for tough reading.
“Five-year survival rates in Swansea – i.e. for enterprises born in 2010 and still active in 2015 – at 36.0%, are further below the equivalent rates for Wales (40.7%) and the UK (41.4%).” [7]
There appears to be a number of reasons for start-up failures and, perhaps unsurprisingly, access to appropriate finance, as well as the diligent management of day-to-day finances, feature highly, as does the requirement for ongoing HR support.
Work undertaken by the Federation of Small Businesses (2017) has highlighted “how important external support is to small firms; in its study, 60% of SMEs reported increased sales and profitability as a result of input on knowledge and skills; following best practice on HR systems was found to lead to a significant impact on long-term performance.” [8]
However, research tells us that the take up rate of support amongst the SME community is relatively low.
“Only 30% of small businesses take external advice and this is because most of these firms say that they don’t understand the benefit of the help on offer.” [9]
Others struggle to access what is often fragmented support with different types of assistance available from a range of providers at different times and places, making it difficult to navigate and even harder to balance with the day-to-day running of a business.
“Small firms want the provision of help to be coordinated better, so that one approach can bring together all support available in a simpler and quicker way.” [10]
The good news!
At Better Jobs, Better Futures we are already taking action, working with businesses across Swansea and the surrounding areas to deliver a wide range of support aimed at enhancing employee engagement and improving workplace planning, progression and productivity.
Our dedicated Workforce Advisors support businesses to identify their key workforce challenges and opportunities through a detailed needs analysis, which explores the following areas:
- Recruitment/staff retention
- Training/development of staff
- Job design
- Succession planning
We then work with the business to develop and implement an action plan, providing support for as long as needed. If you or a business you know might benefit from the support available through the Better Jobs, Better Futures programme please give the team a call on 01792 284450 to see how we can help.
Better Jobs, Better Futures is a fully funded programme that can offer workforce planning and development, a recruitment service tailored to your company and, via access to the wider provision available within Gower College Swansea, a full package of funded and partially funded training courses.
[1] https://www.theguardian.com/small-business-network/2017/mar/01/welsh-businesses-crippling-disadvantage-lifeblood-economy
[2] http://www.theqca.com/article_assets/articledir_171/85657/QCAYouSentiment_Report%20Wave%2017_Final_Email.pdf
[3] http://blog.indeed.co.uk/2017/06/07/british-self-employment/
[4] http://www.fsb.org.uk/docs/default-source/fsb-org-uk/fsb-supporting-self-employment-ukf15f3abb4fa86562a286ff0000dc48fe.pdf?sfvrsn=0
[5] http://www.fsb.org.uk/docs/default-source/fsb-org-uk/fsb-supporting-self-employment-ukf15f3abb4fa86562a286ff0000dc48fe.pdf?sfvrsn=0
[6] https://www.dobsonowen.com/single-post/2017/05/10/Economic-Austerity
[7] (2017) Swansea Economic Profile, City and County of Swansea
[8] https://www.trainingjournal.com/articles/features/magazine-excerpt-collaboration-key-uk-productivity
[9] Research to understand the barriers to take up and use of business support CEEDR (2011)
[10] Young (2015) The report on small firms
