A
recent survey by the Confederation of British Industry (CBI) highlights how
small businesses in the UK have gone on their biggest hiring spree since
records began a generation ago in 1988, with 24 per cent of companies saying
they were increasing staff numbers. This is fuelled by booming domestic demand
that has delivered a fourth consecutive quarter of growing output and orders
for small to medium sized businesses.
These
figures will stoke some optimism in the UK, at least that the economic recovery
is bearing fruit beyond London and the financial services industry. However
export orders remained flat in the three months to July, which was worse than
expected. The CBI said that the disappointing export performance may be a
consequence of the strong pound, which has forced about a dozen quoted
exporters into profit warnings in recent weeks.
Although
about 31 per cent of companies said they were more optimistic about their
business situation, against 11 per cent who reported being less optimistic.
However the CBI sounded a note of caution that shortages of skilled labour were
impeding companies’ growth plans. The proportion of companies citing shortages
as a factor hampering output rose sharply, from 14 per cent to 23 per cent,
over the quarter, reaching similar levels to the second half of 2007 before the
recession, despite the unemployment being nearly 15 percentage points than in
2007 at 6.6 per cent.
I
remember learning back in the 80’s that the last budget you should cut during a
recession is your training and development budget and it seems surreal 30 odd
year’s later that business doesn’t learn from the past. It doesn’t take a
rocket scientist to predict that once a recession is over ‘your’ organisation
is going to need to recruit ‘new’ talent to support its growth – just the same
as it did during the good times.
But
it seems that after a recession many small businesses just simply aren’t ready
to ‘adjust’ to the turnaround – albeit that theory and past practice tells you
that the turnaround will come.
There
seems to be this weird change that goes through the minds of many small
business owners when times are tough – for some reason fooling themselves that
‘recession’ isn’t just a normal part of the cycle of business and local/global
economies – and hence many don’t just become cautious they become totally risk
averse.
For
example, looking at the small business sector in the UK again – a study of the
exporting habits of small and medium-sized companies found that some of the
world’s fastest growing global markets were ‘severely underrepresented’. Where
the study identified that British small businesses are more likely to export to
New Zealand than China, prompting concerns that companies are missing
opportunities.
Research
from a survey of 1,000 small businesses by FedEx showed that small companies
regard China, the world’s second biggest economy, as the most challenging
country to trade with. Trevor Hoyle, vice-president of FedEx Express in the UK
said “although UK SME’s are doing a good job, there seems to be a lack of
awareness, and not only of the benefits to exporting, but to the resources
available, which are plentiful if you know where to look.”
There
is a huge difference when it comes to risk of being brave and being stupid –
where having the courage to identify growth markets and going for them while
others ‘ponder’ on the potential pitfalls can give you a significant
competitive advantage as you develop contacts and relationships with your ‘new’
export market. China, for example, are going to buy from someone – so why
wouldn’t you want it to be you?
References:
Hurley,
J. (2014). Small firms held back by failure to see the big picture. The Times.
4th August, p.47.
Leroux,
M. (2014). Small businesses hire staff at fastest rate since 1988 but need
export help. The Times. 4th August, p.48.
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