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SME concerns - Barriers to SME growth

SME concerns - Barriers to SME growth

Category: Business

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The last month has seen the release of several reports and surveys discussing the current perceived barriers to SME growth. As SME's continue to drive the economy the findings become ever more important.

The NatWest SERTeam/SBRT Quarterly Survey of Small Business has been recording the views of small businesses for the last 20 years. During the last two years, government regulation and increasing paperwork have been seen as the biggest barrier to growth. A total of 19 per cent cited this view as opposed to a figure of eight per cent back in 1986. It is interesting to note that, back in the 1980s and early 90s, the economy and interest rates were seen to be the big issue. According to Andrew McLaughlin, Group Chief Economist: "It is clear from these results that the environment for small businesses has benefited enormously from the fact that we now have a much more stable, less volatile economy. The main concern now of course is the burden of regulation."

Two sets of figures from the Federation of Small Businesses (FSB) seem to mirror these findings. 'Lifting the Barriers to Growth 2006', the fourth biennial survey of the FSB's 195,000 members received almost 19,000 responses with the headline results indicating that red tape, skills and crime are the main obstacles. John Walker, FSB National Policy Chairman, explains: "Regulation, both its volume and complexity, crime and a poorly skilled workforce are issues that we have raised may times before. It is therefore worrying that they are still the main barriers to growth for small firms."

Through separate research the FSB has raised the concerns that SMEs are having with employment law. By counting the calls to their own free legal helpline on employment issues during 2005 it has found an increase of almost 30 per cent on 2004, with disciplinary matters the main bone of contention. As Sandy Harris, FSB Members Services Chairman, noted: "There are at least 26 Acts of Parliament on employment issues and it is tough for small firms to deal with all their requirement. We do not want to repeal or reduce all legal safeguards for employees. But without a simplification of employment law small firms' growth will continue to be stifled."

It is perhaps worth noting that SMEs account for over 97 per cent of UK businesses, make up over 50 per cent of the private sector, employ some 13 million workers and generate over half of the UK's GDP.

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