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How SMEs can afford the skills gap bill

The skills gap is costing SMEs dear. Market conditions are pushing the price of talent higher and higher. How can business owners foot the bill? Alternative finance has a role to play.

According to a new study from the Open University, recruiting staff with relevant skills is becoming increasingly difficult for small businesses. As a result, they are having to spend more money on salaries, temporary staffing and recruitment. The bill of this skills gap? A staggering £2 billion.

The Open University puts the blame on low employment and Brexit, with uncertainty stemming from the latter making people more cautious about moving jobs and keeping EU nationals away. And given the result of the recent General Election, it seems unlikely conditions will improve any time soon.

How small businesses could do with a multi-billion-pound fillip. The rising cost of recruitment is far from the only demand on capital, with pension auto-enrolment, cybersecurity, the living wage and apprenticeship schemes, as well as late payment issues, all impacting cashflow.

Tellingly, according to new challenger bank Hampshire Bank Trust, the ability of small business owners to keep meeting these costs is under threat. Figures from the Trust show that SMEs have suffered a 20% slump in savings over the last year. Its say a key factor is the impact on the market of the EU referendum.

So how can small business owners alleviate the pressure on capital and maintain cashflow? Alternative finance is part of the solution. Services such as invoice finance and asset finance provide SMEs with affordable, accessible and flexible means of funding at a time when costs are being pushed up and traditional lenders remain cautious. Alternative finance is a lifeline that is giving small businesses greater control.

If small businesses are to manage this increase in recruitment and staffing costs – and matters are becoming critical in this area with the Engineering Employers’ Federation warning of possible job cuts – astute financial planning is essential. And in today’s marketplace, this planning has to include alternative finance services.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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