Our small business round-up this month sees updates on the economy, the Apprenticeship Levy scheme and the importance of workforce planning:
Planning during downtime for peak times
At one of the busiest times of the sales year for many small businesses, a new report has found that often they do not plan sufficiently to meet seasonal demands such as the run-up to Christmas. Less than four in ten small firms (37%) make plans during quieter trading periods while 31% plan 3 months in advance for peak seasons. Research by Lloyds Bank found that business owners also lacked confidence in getting their staffing levels right during their busiest times which potentially poses a threat to business performance and customer satisfaction. The report suggests that more SMEs need to think ahead about workforce planning. You might be interested in some of our tips for managing seasonal staff.
Consumer pinch as inflation rises to 3.1%
Figures just announced saw inflation rise to its highest in nearly six years. Inflation rose to 3.1% in November while average weekly wages grew at just 2.2%. It all adds up to small businesses having to work even harder to maintain and increase sales as people hold back on spending where possible. The inflation rise is attributed in part by increased airfares and in leisure consumables such as computer games, according to the ONS. Experts believe that inflation may be close to its peak. However, a close eye is being kept on the service sector where costs and prices are rising and may cause a further inflationary rise.
Manufacturing up, construction down
Despite the rise in inflation in November, the manufacturing sector saw growth in October for the sixth month running – output increased by 0.1% in October. Record car production is said to have helped the run. This is the longest period of expansion for British manufacturing for at least two decades. However ONS figures also show that construction sector output was down by 1.7% in October when a rise had been expected. The downward trend is said to be due to falls in repairs and maintenance as well as new work, which dropped by 3% and 0.6% respectively.
Small firms put off international trading
Already subject to the pressures of rising inflation and falling consumer spending, some SMEs are also holding back from trading internationally. A survey found that over one million fewer UK SMEs traded internationally in the third quarter (April to June), compared to the same period in 2016; seven in ten (70%) expected overseas trade to decline or stay constant in the near future. When the weak pound means conditions are good for international expansion, World First’s SME Global Trade Barometer highlighted this downturn in international trading particularly noticeable amongst smaller SMEs. Probing SMEs further revealed that 44% of firms were concerned about the lack of progress with Brexit talks while 33% were concerned about its effect on currency volatility. The transport and distribution industry remains the most outward looking sector, (based on the regularity of international money transfers).
Apprenticeship numbers down since new levy introduced
The government Apprenticeship Levy introduced in April this year has failed to boost apprenticeships. In fact, new enrolments were down 59% in the last three months of the 2017 academic year – at 48,000 compared to 117,000 at the same time in the previous year. The disappointing figures from the Department of Education come at a time when many small businesses are being affected by skills shortages.
Mike Cherry, National Chairman at the Federation of Small Businesses is quoted as saying that “Small businesses will be essential to the Government reaching its target of 3 million apprenticeships by 2020… While many small firms are committed to apprenticeships, many are still overwhelmed by the complexities in the system. The Government should make sure that when levy payers are able to share their digital vouchers they do so with small firms in their supply chain. Small firms should also be involved in the design of the new apprenticeship standards”.