With 50 per cent of small businesses with over five employees planning to grow their headcount over the next two years, finding skilled staff tops the list of challenges business owners face, up from third place in 2015, according to a new report by Albion Ventures, one of the largest independent venture capital investors in the UK.
The skills shortage is most acute among London-based small firms followed by those in the South East and the North West. On a sector basis SMEs in the manufacturing industry reported the highest level of concern about finding skilled staff, followed by those in the technology and telecoms sector and construction businesses in third place. Conversely, finding unskilled staff has fallen to 15th place in the list of SME challenges.
This is the first time that SMEs have identified a shortage of skilled staff as the biggest obstacle to growth, ahead of red tape and regulation ranked in second and third places in 2016. Political uncertainty and leaving the EU were ranked in fourth and sixth place respectively suggesting that small business owners are most concerned with tangible obstacles to growth rather than those over which they have less control.
According to the fourth Albion Growth Report, which is based on interviews with 1,000 SMEs and sheds light on the factors that create and impede growth in post-Brexit Britain, the biggest skills gap reported by over a quarter of SMEs is marketing, followed by new technology (21 per cent) and business planning (17 per cent). The smallest skills gap is in Financial Management with only nine per cent of small business owners reporting problems.
Patrick Reeve, managing partner at Albion Ventures, commented: “A shortage of skilled staff shows that the growth pressures on the economy are at the most sophisticated end of the scale, which is precisely where we can expect to generate the biggest returns. The economy is coming under capacity constraints at a time of considerable political uncertainty.
“Policymakers charged with deciding our post-Brexit future must recognise that many of the skills that enable us to compete in a fast-changing and increasingly competitive world are in short supply and our best chance of overcoming this challenge is by building on the UK’s first class reputation as a home for global talent.”