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How SMEs can afford to close the skills gap

SMEs face losing out on millions of pounds in revenue as a result of a sector-wide skills gap. To solve this problem, investment is required in staff recruitment, training and retention. But the price tag is significant. Alternative finance can help these firms pay the bill.

According to new research from Robert Half UK, the average SME faces a skills gap that could cost them £145,000 over the next 12 months, rising to as much as £318,000 over the next five years. For small businesses that are already under significant pressure thanks to a raft of policy and non-policy related costs and downbeat market conditions, this is cash that they cannot afford to miss out on.

The study attributes the skills gap to a range of factors, including a talent pool that is shrinking because of Brexit, increased digitalisation and economic influences. It goes on to say that this shortfall is negatively impacting the country’s productivity, stifling innovation and stopping businesses from entering new markets.

One sector in which the effect of the skills gap is particularly notable at present is the construction industry. According to a new survey from the Federation of Master Builders, smaller firms are nervous about hiring new staff and are reducing the size of their workforces. Continued economic uncertainty as a result of Brexit is cited as a major factor behind the trend, with wage inflation, driven by skill shortages, eating into profit margins and affecting firms’ ability to recruit and retain workers.

So, how can SMEs meet the costs of recruiting and retaining employees and close the skills gap?

Alternative finance has a role to play.

In the wake of prolonged caution from traditional lenders, a position that Brexit is helping to entrench, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are proving a vital source of capital for small businesses, both for safeguarding cashflow and for essential investment, including in employee recruitment and retention.

This is how a small business in Sussex used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new resources.

At a time when political uncertainty is having a destabilising effect on the economy and key markets, it is understandable that SMEs are taking a cautious approach to staff recruitment and retention. But to grow, compete and succeed, it is vital that these firms close the skills gap and this means investing in new and existing staff. To achieve this goal, businesses need to be aware of all the funding options available to them, including alternative finance.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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