Employing creative individuals is more important for driving innovation than coming up with bright ideas, according to small businesses.
New research from Clydesdale and Yorkshire Banks has shown that small firms are investing in creative skills in order to stimulate growth.
Of 750 business leaders surveyed, more than half said having the right people and skills is the single most important factor for a firm to be innovative. Some 24 per cent said having the right idea is most crucial.
As a result of this belief, it appears small businesses have prioritised training and development over other investment opportunities during the past year and will do the same over the next twelve months. Other important considerations were new equipment, technology and investment in premises.
Paul Shephard, director of business and private banking at Clydesdale and Yorkshire Banks, said: “In today’s increasingly digital economy, where customer demands are higher than ever before, innovation is even more crucial. We’ve seen the make-up of our economy move from one of heavy industry to one of knowledge. This means growing businesses are often rich with intellectual property and intangible assets, rather than premises, plant or machinery.”
Around half of small business leaders felt the UK economy fostered innovation, and two thirds said the economy has the right creative skills for growth.
Despite this, the research also found firms weren’t necessarily doing all they could to access available support for research and development activities.
Less than a third had accessed government initiatives such as R&D tax credits or Patent Box, and only a third intended to so in the future.
The financial secretary to the Treasury, David Gauke, recently announced the government had launched a new R&D plan to make it easier for small firms investing in research and development to claim tax relief. Small companies with a turnover under £2m and fewer than 50 employees will be able to seek advance assurance on R&D tax relief.
HMRC evaluation has shown that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment.
In terms of financing innovation and creativity across the UK, the response from the survey was also mixed, with the same number of businesses having a dedicated budget for research and development as those that didn’t.
Shephard said: “Innovation comes in many forms, not just cutting-edge technology or design. For many service-led industries this could mean being innovative and creative to meet customer demands, or approaching the market in a different way to competitors.”
He added that was crucial was for businesses to “continually review their performance and how they serve customers to ensure they are on top of their game”.
Sign up to our newsletter to get the latest from Business Advice.
