The Challenges of Improving Small Business Productivity in the UK
Recent findings from the Federation of Small Businesses (FSB) indicate that the UK’s productivity levels are facing significant challenges that may persist for the foreseeable future. The latest Small Business Index (Q2) highlights key barriers such as political uncertainty and difficulties in finding skilled staff.
According to the report, 35% of small businesses are struggling to recruit employees with the necessary skills, marking the highest proportion since Q3 2015. Additionally, the net balance of businesses hiring new staff versus reducing team size has reached a three-year low at -2%.
Furthermore, a substantial 72% of businesses have no plans to invest in their companies over the next three months, the highest percentage since Q2 2017. This lack of investment is mirrored in Office for National Statistics (ONS) data, which shows a decline in business investment over four consecutive quarters – a trend not seen since the 2008 financial crisis.
Mike Cherry, FSB national chairman, emphasized the need for clarity and support from political leaders, stating, “It’s impossible for small business owners to invest for the future when we don’t know what the future holds.”
Long Road to Improving Productivity
Experts at Be the Business suggest that it may take up to a decade for UK business productivity to reach optimal levels. James Gribben, senior corporate affairs manager, commented, “The UK has experienced a decade of under-performance and we will need a decade of improvements to turn things around.”
With net migration from the EU declining and affecting small employers who rely on EU staff, the challenges continue to mount for UK businesses.
Strategies for Enhancing Productivity
Gribben highlighted the opportunities for small businesses to improve performance by adopting more effective practices and learning from the most productive companies. By making targeted changes and taking proactive steps, businesses can realize significant performance gains.
However, the report also reveals concerns about the affordability of new credit, with 43% of small businesses finding it unaffordable – the highest percentage since Q1 2015. This poses a challenge for firms seeking external finance to support growth.
Mike Cherry stressed the importance of ensuring that lending institutions are adequately supported to provide essential financial assistance to small businesses. He warned against a sudden withdrawal of European Investment Fund support without a suitable domestic replacement, which could have catastrophic consequences.
Exploring Productivity Enhancements
For small business owners looking to enhance productivity, there are various free apps available to streamline operations and boost efficiency. These tools can help streamline processes, improve communication, and optimize workflow for better overall performance.