10 October 2023 – Small UK businesses have been impacted by a skills gap, which has made hiring new staff a huge challenge for some. 72% want more support from the government to upskill staff and close the skills gap.
Small businesses had a tough time in the past few years. The pandemic made trading conditions difficult and the supply chain issues that followed, added more pressure still.
Many small and medium enterprises (SMEs) are still in surviving mode rather than looking at thriving, with energy costs, inflation and borrowing costs still at an elevated level.
All these financial pressures make being a small business owner a challenging task. But another issue that has plagued many businesses since we came out of the pandemic is a labour and skills shortage.
This has been going on for some years now and many small businesses (72%) want the government to provide them with more support to upskill staff.
Skills Gap Stopping SMEs From Thriving
According to new research by small business lender iwoca, more than half of small businesses (54%) say that they can’t find staff with the right skills. For 48% of those, this is an issue they had to deal with for at least a year.
This can have a huge impact on the ability of small businesses to grow and thrive, as well as the wellbeing of owners. Iwoca’s survey shows that 42% of small business owners work long hours to make up for the lack of staff with the right skills.
Added to the already stressful financial situation, this will likely negatively impact on business owners mental health and wellbeing. But it also stops many small businesses from achieving their potential.
31% of small businesses have said that they had to delay growing their business due to the difficulties of finding staff with the right skills. A quarter of small businesses had to hire temporary workers, which is costly and doesn’t solve the problem in the long term.
When asked in the survey what small businesses are looking for when hiring staff, almost a third (32.5%) said experience in the relevant sector is the most important thing. 28.3% named experience in the same role as the key factor when looking for a new staff member.
What isn’t important for many small businesses is an academic qualification. Only 4.2% said that a university degree is the main factor when hiring staff. This shows that the value of an academic education is declining in the eyes of many SMEs.
Call For Mor Support From Goverment To Upskill Staff
There isn’t a consensus among small businesses on how this problem can be solved. With the skills gap being a longstanding issue, many small businesses think that fundamental change is needed to sort this out.
75% of the respondents to the iwoca survey believe that the current education system in the UK is not fit for purpose. Small business owners don’t believe that school is able to prepare young people for the job market.
However, others look for a different solution, with the majority (76%) saying that the answer to the talent gap are apprenticeships. These provide young people with the skills and experiences needed to succeed in their chosen field.
Others (72%) want to upskill staff they already have, but want the government to provide more support to them with this task. Upskilling employees has many benefits, not only to get the skills the business needs. It also helps with staff satisfaction and retention.
Almost 40% of small business owners think that current immigration rules are too narrow. They want them to be widened to allow them to recruit the talent they need from abroad.
Getting the right staff is vital for any business, but especially for small businesses. It allows owners or senior managers to focus on growing the business and thrive.
Not finding the right people can have a huge impact on a small business. However, we believe there is an overreliance on experience, which the iwoca survey has highlighted. By looking for employees who have worked in the right sector and in the same role, small businesses greatly reduce the number of possible candidates.
Especially during labour and skills shortages, SMEs need to be flexible and willing to hire potential rather than experience. In our experience, an eagerness to learn, a can-do attitude and a desire to make a difference for the business are often worth more than specific skills or experience.
There are instances where a certain expertise and experience is paramount, but for many jobs, the relevant skills can be learned. To upskill staff is another great way to gain dedicated and high performing staff members that will drive the business forward.
Investing in inexperienced staff members might take more time and effort, but you get employees who equate their success with the success of the business. They will be just as eager to grow the business as you are.