Business development · 12 October 2016

Filling the skills gap becomes the biggest challenge for small UK firms

manufacturing
Recruiting skilled workers is now the primary barrier to growth, according to small business owners

Overcoming a shortage of skilled workers has become the primary challenge for small business owners, according to a new report assessing the growth expectations of small UK firms.

A study from venture capitalist firm Albion Ventures, based on interviews with over 1,000 small business leaders, revealed that the skills gap was of greater concern than cash flow, public procurement processes and access to finance.

Building a skilled workforce was found to be a particular concern for individuals in the manufacturing, construction, medical and healthcare sectors.

Commenting on the report’s findings, Patrick Reeve, managing partner at Albion Ventures, suggested that the pool of skilled workers was failing to keep up with the growth of the UK’s small businesses.

“Firms are looking to grow their headcount and productivity is on the increase. The biggest barrier to growth – finding skilled staff – is generated by success rather than failure,” he said in a statement.

In spite of the concerns of maintaining a skilled workforce, just five per cent of small business owners expected their firms to scale-down in size over the next two years, according to the research, while almost three-quarters expected to grow “dramatically or moderately”.

Reflecting on the increased optimism of small business owners in the face of a lack of talent, Reeve pointed to the importance of skills in enabling firms to grow.

“While many of the pressures on growth we have seen in recent years have eased, the skills that enable us to compete are in short supply,” he said.

The skills gap in Britain’s workforce may come under further pressure if Britain loses access to labour from the EU. Evidence has shown that small firms are more likely to employ EU nationals, as the country’s domestic talent is often snapped-up by the larger companies.

Further research has also suggested that micro firms suffer disproportionately from the skills gap.

A survey by the UK Commission for Employment and Skills (UKCES) recently revealed that employees at micro businesses were provided with twice as many days for “upskilling” than workers at larger firms.

However, despite investing more in training and employee development than larger businesses, decision makers at the UK’s smallest firms reported that almost a third of vacancies were “hard to fill” due to a lack of skills, qualifications or experience among applicants. By contrast, just 18 per cent of large enterprises reported this problem.

According to a separate report, a lack of IT expertise in Britain could be leaving firms open to cyber-crime.

A survey found that more than three-quarters of IT professionals in Britain felt that the skills gap in the country’s tech industry was leaving firms open to increased security threats in the age of cloud-computing.

Workers with cloud security skills were reported to be the most sought-after and most difficult to recruit.

Read on to find out the best UK regions to begin a business as a tradesperson.

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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