Based on research that shows that 74% of SME employers aspire to grow over a three year period[i], new insights show that if all of these aspiring businesses achieved growth at a rate of 5% over the next three years (above and beyond the 33% that are expected to grow[ii]) then an additional £9 billion would be contributed to the UK’s GVA (Gross Value Added). If they grew by 10% the additional contribution would be £18 billion[iii].
Business Link research also released today[iv], shows that when businesses were asked what was stopping them from growing, ‘economic uncertainty’ was raised by 48% of Business Link customers as being the largest barrier. ‘Market demand’ (22%) and ‘regulations’ (22%) ranked joint second while ‘cashflow’ came in third, with 20% of customers identifying this as a barrier to growth.
Barriers to business growth identified by Business Link customers:
1. Economic uncertainty 48%
2. Market demand 22%
3. Regulations 22%
4. Cashflow 20%
5. Competition 13%
6. Keeping staff 9%
7. Recruiting staff 8%
8. Lack of access to business advice 8%
To address these barriers and promote business growth, Business Link has launched the Growth and Improvement Service, alongside a number of other government initiatives being announced during Global Entrepreneurship Week (14 – 20 November) to help SMEs achieve the growth they desire.
The Growth and Improvement Service offers straightforward, practical guidance for people who want to get more out of their business – such as generating more sales, increasing profits, and saving time and money. The site, which is launched alongside Business Link’s Start-Up service, provides businesses with the support they need to improve and grow, providing guidance on cash flow, finding new customers, and recruiting and training staff. For example:
· Access to grant and support schemes: The new and improved Business Support Finder enables businesses to quickly find details of publicly-funded grants, loans or offers of expertise to help that they may be entitled to.
· Financing growth: Business-owners can use new tools to help them think through their options, making sure they consider all available finance sources and enabling them to plan for future developments.
· Staff retention and recruitment: The new service can guide business owners through the recruitment process, enabling them to evaluate their immediate and long-terms needs, explore different options and understand the rules that need to be followed.
· Business advice: For businesses looking for sources of business advice, the improved Events Finder can put them in touch with local networking, training, and peer support opportunities; while the new Mentorsme.co.uk service can help businesses across the UK to find a mentor.
Ray Lambe, Director, Business Link said:
“It is encouraging to see that so many businesses are looking to grow and develop, despite the difficult economic environment they are operating in. While it is not surprising that SMEs are finding the economic environment tough at the moment, our research identified a number of other issues that businesses are grappling with which Business Link’s new services can help with. In particular, the new Growth and Improvement Service provides information and tools to help businesses manage staff retention and recruitment, think through finance options and win new customers; and the increased interactivity helps businesses support each other by sharing their ideas and experiences. By helping to unlock barriers to growth we’re confident that the new Business Link services will help SMEs to make that vital contribution to the UK economy that they are capable of.”
For further information about Business Link’s new services, please visit www.businesslink.gov.uk/newservices.
[i] SBS 2010 and NESTA research
[ii] Of those SMEs that survive, only a third will achieve growth (SBS 2010 and NESTA research)
[iii] Our calculations are based on the assumptions that:
· There were 2.08 million SMEs registered for PAYE and /or VAT in the UK in March 2011 (ONS US: UK Business: Activity, Size and Location 2011)
· In 2009 SMEs contributed £440 billion GVA (BIS analysis of ONS Annual Business Survey 2009)
· 74% of SME employers aspire to grow over a three year period (SBS 2010 and NESTA research)
· Of those SMEs that survive, only a third will achieve growth (SBS 2010 and NESTA research)
Assuming the 74% of SME employers that aspire to grow over the next three years are similar in size to those who do not, they would be contributing £326 billion to the UK’s GVA.
[£440 billion x 0.74 = £326 billion]
If these 74% of SMEs had achieved sufficient additional growth for their output to be 5% or10% higher, the additional GVA added would be as follows:
· 5% growth on £326 billion = £16 billion additional GVA
· 10% growth on £326 billion = £32 billion additional GVA
Currently (based on statistics provided by the SBS 2010) only 33% of SME employers achieve growth each year. At 33% these SMEs would be contributing a total of £145 billion to the UK’s GVA [£440 billion x 0.33 = £145 billion]. Had each achieved sufficient additional growth for their output to be 5% or 10% higher, their additional GVA would be:
· 5% growth on £145 billion = £7 billion additional GVA
· 10% growth on £145 billion = £14 billion additional GVA
By helping those who aspire to grow, but would not be expected to, to achieve growth (based on growth rates of 5% and 10%) the following additional GVA could be added to the British economy.
· 5% growth: £16 billion - £7 billion = £9 billion
· 10% growth: £32 billion - £14 billion = £18 billion
[iv] Business Link Customer Satisfaction Survey, undertaken in November 2011 with 185 Businesses Link customers
