Russell Gould, COO at Orange Money (trading as Ezbob and Everline)
Small businesses are uncommonly high up on the agenda for the upcoming May general election. Although the leading parties have realised for some time that the potential of small businesses to boost economic growth in the UK remains largely untapped, the issue seems more central to their campaigns than ever. The realisation is that ultimately, without addressing the issues hampering their growth, small businesses cannot fulfil their growth plans and contribute to the economic recovery. As a small business owner, the opportunity of having your needs catered to, is not one to be missed. Therefore, as the leading parties battle it out for your vote, it’s crucial to make sure you are aware of what help is currently available to you and how their proposed policies correlate to your business’ needs. Two of the more obvious places to start are the widely recognised issues of access to finance and the small business skills shortage.
Improving your access to finance
It is no myth that small businesses need better access to appropriate funding in order to fuel economic growth. In fact, research undertaken by Everline and the Centre for Economic and Business Research (Cebr) towards the end of last year found that although small businesses have big growth plans for 2015, they are unable to carry them out due to a lack of finance. The reality is that in the current market, most SMEs will only approach larger banks when seeking finance, even though the process can be time consuming and the rejection rate is around 50%[i].
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The e-lending market is growing, offering small businesses a solution to the problem but awareness of these sources of finance among business owners remains relatively low. Recent government efforts such as passing the Small Business Enterprise & Employment (SBEE) bill which forces banks to share SME credit data with alternative lenders, will make it much clearer for small businesses to understand and access all their financing options upfront but much more still needs to be done.
If the Conservatives were to win the election again, small businesses have been promised a good deal. Current small business funding initiatives such as the British Business Bank would be expanded. The Bank recently announced plans to build on SBEE Bill legislation in 2016 with a new programme to facilitate the process for traditional lenders and big banks to refer small businesses that have been rejected for a loan to alternative financing options.[ii] However, the Labour party plans to create a new British Investment Bank which could prove just as helpful if it manages to increase small business lending as promised.
If you are largely unaware of the alternative finance options available to you, it isn’t your fault. Many small businesses owners are unclear on the benefits of emerging alternative lenders which can provide the flexible, fast finance solutions businesses need in order to grow. However, judging by the steps that have already been taken by the current government and how high the issue of boosting small business lending is on the election agenda, the future is looking much clearer. To make sure you’re ahead of the game, whichever party wins,get familiar with all the proposed schemes so you can tap into them when the time comes.
Beating the skills shortage
Everline’s research with the Cebr also found that small businesses are unable to carry out their growth plans due to a lack of workers with the right skills. The London Stock Exchange Group’s recent “1,000 Companies to Inspire Britain” publication found that boosting the most promising “magic 6 per cent” of the UK’s four million SMEs would create as many as 230,000 new jobs and add £38bn to UK GDP.[iii] These fastest-growing companies across the UK were not only in the digital and technology sector but also in the manufacturing, construction and engineering industries.
Unfortunately, these sectors require workers with STEM (science, technology, engineering and maths) subject skills, an area where the skills shortage is most apparent. The subject areas are not taught strongly enough in schools and children are not made aware of the potential careers affiliated with them. To make matters worse, the opportunities to learn skills related to STEM subjects post-school are limited too. There is also the problem of a lack of digital skills for small businesses to tap into. The digitalisation of business is fast moving and in order for them to keep up, new talent needs to be up-to-date with the latest technologies and tools to facilitate business growth.
All three leading parties have identified the need to create more effective apprenticeships programmes to allow people to learn the right skills, particularly in STEM subjects. The Conservatives plan to create three million new apprenticeships by 2020, the Liberal Democrats plan to nearly double the current number and Labour plans to increase the number as well as funding those applying for the programmes. In addition, the Conservatives plan to take steps to nurture entrepreneurial and digital skills in schools.
These proposed policies will eventually grow the talent pool for you to find workers with the right skills to help you run your business. It seems that wherever you cast your vote, the workers you need are more likely to be coming your way but it’s not the time to become complacent. In the meantime, make sure you have a business plan in place which identifies exactly where you are lacking in talent.
Be prepared for any outcome
The general election is likely to mark a huge milestone for small businesses in the UK in their struggle for the finance and talent they need to grow. The leading parties have all realised that a thriving small businesses sector is essential to a sustainable economic recovery. Therefore, understanding the current small business market and how your business will be affected by the election, depending on which party wins, is crucial. Read the party manifestos and get clued up on the different policies. It is knowing what help will be available to you, when and how to take advantage of it that will set you apart from your competitors.
[i] Gov.co.uk HM Treasury consultation on SME finance: help to match SMEs rejected for finance with alternative lenders