According to recent figures, 53% of small- and medium-sized enterprises (SMEs) are in a stronger financial position than 12 months ago, yet many are predicting a challenging start to 2016, as revealed in the Business in Britain report1.
SMEs are vital for the growth of the UK economy, withsmall- and medium-sized companies make up 99% of private sector business in the UK, with a fifth of these operating in the construction sector2. Not only do these firms have the ability to support economic growth in local areas, they also provide work for 15.6 million people in the UK each year.
However, many small companies struggle to grow adequately, as business owners can sometimes lack the management and entrepreneurial skills to match their technical abilities. For example, a highly skilled roofer or cladding installer, who can put his or her hands to most trades on site, may struggle with cash flow forecasting, employment legislation, sales pipeline management, purchasing and other essential business disciplines.
Fast-growing companies are job creators and can be innovative and resourceful in attracting new talent into the sector, making sure that the construction industry remains vibrant.
Small business owners should therefore be flexible and ready to adapt to change, as 2016 will see the introduction of new policies such as the national living wage, the small business rollout of the workplace pension, changes to dividend taxation and the introduction of the apprenticeship levy. Each of these brings about their own challenges, but they also provide opportunities for development.
With all these upcoming changes, it has been estimated that small businesses could miss out on up to £25billion in revenue as a result of inadequate business planning. In addition, recent research shows that up to 26% of all SMEs are operating without any kind of business plan3. This can hold businesses back from achieving business goals, as effective planning is key for small businesses to develop.
In addition, to sustain and enhance growth, businesses must be sure to employ the right people for the job. When taking on a new member of staff, it can be difficult to get to grips with surrounding legislation. However, investing in employees is an essential part of creating a stronger skills base. Not only this, but access to a talented workforce also benefits the local economy as well as future proofing the construction industry, especially at a time when industry statistics show that over 400,000 construction workers will reach retirement age in the next five to ten years.
Small businesses are faced with many challenges in the current economy, but this also provides many opportunities for development.
This is where the Entrepreneurship Foundation, set up by Saint-Gobain in association with the Construction Industry Training Board (CITB), could make a real contribution, helping small businesses to grow and develop.
The initiative, launched in 2015, provides free training, one-on-one mentoring and support to small construction firms. Training focuses on business and management disciplines, as well as exploring the growth opportunities in sustainable building techniques and products.
The Foundation aims to support over 200 growing businesses in the next five years, confident these businesses have the potential to employ thousands more people as they grow successfully, with the support of the Foundation. By accelerating small business growth, businesses will be able to meet the demands of a evolving, dynamic and innovative construction industry.
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1 Lloyds Bank, ‘Business in Britain Report’, January 2016
2 FSB, ‘Small Business Statistics’, http://www.fsb.org.uk/media-centre/small-business-statistics
3 Centre for Economics and Business Research, December 2015