Small (with medium) is the new 'big' and for those in the SME sector, recruiting good (scratch that - any) staff is the biggest challenge being faced in the UK across business at the moment. In this country a small- or medium-sized enterprise is one with fewer than 250 employees, meaning they account for 99.3% of the private sector, providing 60% of all employment.
Despite all of the other obvious and much-discussed challenges being suffered by such businesses at the moment, one of the biggest they have is employing new people. Most SMEs don’t have an in-house HR function, which makes the hiring process all the more difficult, forcing them to employ the services of recruitment experts who come in, offer specialist support and charge an outlandishly high fee for putting a square person in a squarish hole.
The latest data leads to questions as to why this is the case. There has been a strong 14.3 per cent increase in year-on-year sales growth and a “record” 5 per cent rise in wages, so why is it so hard to attract a person who knows what an apostrophe is and what to do with one? Research last month demonstrated that SMEs are “struggling to compete with big business” when it comes to salaries, perks and job security, as late payments to small businesses reportedly increased in May, with the average time to pay rising by 1.1 days to 30.6 days. (Yes, those last two numbers are worth reading again.) The average payments were late by 8.8 days beyond the agreed terms, an increase of almost two days since the last gathering of such stats, in April of this year. The knock-on effect on cashflow makes it more difficult for a small business to compete with their big brothers.
In contrast to all other industries, sales by small businesses in retail fell by 1.3 per cent year-on-year for the second consecutive month that retail sales have fallen. In May, it was the only sector to record negative sales growth. This data is said to highlight the impact of the cost of living crisis on businesses that rely on consumers who are spending less on the high street.
The hospitality sector is offering “record wages” as the summer season continues, with wages 7.7 per cent higher in May 2022 than in the equivalent month last year. Attracting workers still remains difficult in the sector as jobs are said to be falling 3 per cent year-on-year, however.
Small firms are having to offer some of the highest wages in recent memory to compete for staff, which is piling more pressure on them alongside other rising costs. When you consider the unbreakable link between manufacturing and construction and other industries, like retail, this just adds to the pile of woes businesses often inexperienced in dealing with such crises are facing as we march into the summer.