What do small businesses need from the next Government? Start with skills

Economy & Politics | Reports

By Anne Kiem, Executive Director Small Business Charter and Chief Executive of the Chartered Association of Business Schools

Support for small business has become a key election issue, and for all the right reasons.

The UK’s 5.6 million small businesses are the lifeblood of our economy. Small, but mighty, they not only wield considerable voting power, but house strong potential to drive the UK’s future prosperity.

So, what do these businesses actually need from the next Government?

Beyond resolving the obvious issue of Brexit and taking action on the scourge of late payments, UK small business needs help in building its capability to deal with longer term uncertainty. A key issue is the ongoing change to the labour market and business landscape that is being driven by technology.

Our Digital Future

While disruption brings many challenges, it also represents an exciting business opportunity. The CBI estimates that £100bn could be added to the UK economy by increasing business adoption of key technologies and management practices.

Whether it is the powerful insight offered from data analytics, or the efficiencies delivered by automation, robotics and AI, many of these technologies can actually benefit small business. The pace of technological advances means that today’s small firms who embrace innovation will be tomorrow’s success stories.

Building Skills

However, many small businesses are struggling to do so and a key barrier they face is a skills deficit. A 2017 FSB survey found that nearly two million small businesses in the UK lacked basic digital skills and knowledge.

It is really vital that we take action to build capability and understanding in this area. Not only would this open up a whole new world of opportunity for our entrepreneurs, it would solve many of the systemic issues behind the UK’s notoriously low productivity, which has long been a drag on our economy.

A 2018 parliamentary report identified the “long tail of unproductive SMEs” as being at the root of this productivity problem. Nesta and Sage argue that improving the digital skills of the SME workforce would result in the most significant productivity gain, estimated at around £18.8 billion.

Rather than laying blame at the door of SMEs – many of whom have perfectly understandable reasons for overlooking technology, from lack of time and knowledge, to fears of cyber security – we need to empower them.

This starts with making it quick and easy for small businesses to grow digital and management skills and working with them to unlock the efficiency and profitability benefits that come with adopting new technology. We also need to offer more support to build broader skills like resilience, agility and confidence, which are needed to successfully thrive and respond to ongoing technological change over the longer term.

There have already been some great steps in the right direction. For our own part the Small Business Charter has just launched a pioneering programme to help microbusiness owners to engage with and implement digital and new technologies that could help their businesses grow.

Made possible through the £9m Business Basics Programme run by the Department of Business, Energy and Industrial Strategy (BEIS) and Innovate UK, the Leading to Grow Programme will be run through fifteen business schools across the UK, at no cost to business.

Microbusinesses are a long-overlooked group, but they are a vital part of the economy, forming almost one fifth of the small business population and employing over four million people, they contribute £533bn to the UK. They are also a group that we know particularly struggle to introduce new technology.

With so many areas being covered across England, it is hoped that this programme will help a large number of microbusinesses and support economic growth across many regions.

Starting from January, this free training is exactly the kind of new year boost we need to be giving small businesses.

There is undoubtedly a much longer Christmas list that small business will want from the next Government, but when it comes to positioning this vital sector to grow and thrive in an uncertain world, we definitely need to start with skills.

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