EY Report Highlights SME Growth, Alongside Recruitment Struggles

While small and medium-sized enterprises (SMEs) in the UK are currently experiencing "encouraging growth", leading them to feel optimistic about their future, many are still struggling to hire skilled staff.

This is the finding of a new report from Ernst & Young (EY), which revealed that over the past 12 months, 83 per cent of SMEs have taken on more staff, with over 50 new jobs being created within 28 per cent of these businesses, showing strong growth for the sector.

Over the past year, 75 per cent of SMEs reported an increase in their turnover, with this totalling more than five per cent for 57 per cent of the 226 respondents.

In addition, EY discovered 93 per cent of small businesses were feeling confident about their future, expecting their turnover to increase within the next three years. Some 56 per cent predicted theirs would grow by more than ten per cent during this period.

This was a view especially held by those working within the pharmaceutical industry, as all such respondents stated they believed they would experience growth of at least ten per cent.

Stuart Watson of EY explained: "Overall, the future looks bright for UK entrepreneurs, with many delivering strong performance in recent years and expecting good times ahead.

"However, our survey highlights that while businesses are increasing headcount at a considerable rate and are expecting to grow even more over the next year, the right people may not be there to fuel that growth."

With regard to recruitment, it was found that only 23 per cent of respondents felt they could attract staff with the talent they required - something that could prove to be a hindrance for their progress.

To help to fill these prevalent skills gaps, Mr Watson added that entrepreneurs need to "demonstrate fresh thinking and an innovative approach", as this will assist them in standing out among others in their field.

Additionally, 29 per cent of respondents called for the next government to cut red tape relating to business growth, with one-fifth also wanting taxes to be reduced.

Expert Opinion

Entrepreneurs are clearly feeling positive after a difficult few years, with many looking at how they can develop their offerings and better improve the service and products they are providing in their respective markets. <br/> <br/>"With turnover and confidence increasing, it is likely that many SMEs will be seriously considering their next targets. <br/> <br/>"Small businesses should seek legal advice when planning for their future, to ensure that all aspects of their strategies are properly considered and also compliant with relevant regulations." Fergal Dowling - Partner