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How small businesses can fund essential employee training

News that underperforming employees are costing small businesses thousands of pounds every year underlines the importance of getting recruitment and staff training strategies right. But doing so comes with a price tag. Alternative finance can help SMEs afford the investment.

According to a new study from the Sunflower Group, underperforming employees are costing small businesses on average almost £40,000 year. This is an eye-watering figure for a sector facing such strong headwinds.

One of the largest problems that business owners reported in the research was that new employees need greater supervision and training than expected. Plugging this skills gap often takes other staff members away from their work, consuming valuable time. In addition, over three quarters of employers stated that they find it difficult to attract people with the right skills.

So, why are small businesses finding themselves in such a position? Funding is key reason. More spending on recruitment and staff training, and a greater ability to offer attractive salaries and workplace incentives, would go a long way to help solve these problems. Tellingly, a fifth of business owners interviewed for the Sunflower Group study pointed to a lack of cash for such investment.

The government has cut the cost of hiring through a £2,000 employment allowance for SMEs and provides grants worth £1,500 for the first 10 apprentices that an SME put on its books aged between 16 and 24, but these measures offer only limited support.

Clearly there is a need for industry specific know-how and crucially, in today’s marketplace this includes digital skills. In our digital age, whose progress is being driven by the Internet of Things and the demand for connectivity, it is necessary for employees to be digitally savvy, both generally and in terms of a specific role. This includes awareness of cybersecurity issues. Training is available but it comes with a significant bill.

So, how can small businesses ensure that their recruitment and training strategies are providing them with the skilled employees that they need. Alternative finance can help.

In the wake of prolonged caution from traditional lenders, invoice finance, asset finance, peer-to-peer lending and crowdfunding are providing small businesses with an alternative means of raising funds for essential investment, such as in recruitment and training. This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to expand its capabilities.

If the small business sector is going to the engine of growth that the government wants it to be and that the country needs it to be, then it must be able to close the skills gap. Brexit and current market conditions are significant obstacles to achieving this goal, but it is possible. To do so, business owners need to make use of all the funding options available to them, including alternative finance.

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

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