- Over one in three (36%) firms experiencing skills shortages
- Biggest skills gaps in sales, IT and financial management
A new study reveals that a skills gap is hindering small business growth. Albion Ventures, a venture capital investor specialising in VCTs with around £230 million under management, commissioned the Albion Ventures Growth Report 2013, which examined the challenges and opportunities faced by 450 SMEs with a combined turnover of over £1.6 billion.
The report 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 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.
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%
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.”