Small Business Tracker

Transcription

1 Small Business Tracker Autumn everline.com

2 Contents In the Everline small business tracker this quarter Contents Page Small Business Growth Index 3 Small Business Employment Index 4 Small Business Health Dashboard 5 International comparison 6 The Sharper Focus: small businesses and skill shortages 7 Method notes 12 Contact 13 2

3 The Everline Small Business Growth Index Small businesses see output growth picking up again The Everline Small Business Growth Index reached new highs of in Q3 2014, indicating a strengthening of the trading environment for small firms. This reading is above the 110 mark that indicates very strong growth compared to an encompassing period of recent history: the average of (i.e. the recessionary period and two years either side). The Index has been on a general upward trend over the past year and a half, from the depths of difficult conditions at the end of The Everline Small Business Growth Index More small businesses are now reporting turnover growth, with sales volumes growing at a faster rate. In addition the performance of small retailers in particular has strengthened notably recently, with sales volumes returning to annual increase after a full year of decline Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Note: represents average growth for the period (i.e. the 2008/09 recession and two years either side). Readings above 110 represent very strong growth, readings below 95 point towards contraction. Source: Cebr analysis

4 The Everline Small Business Employment Index Hiring conditions strengthening among the UK s small business population This quarter s Small Business Employment Index highlights how the hiring environment for small businesses has strengthened The Everline Small Business Employment Index The Index has now climbed to its highest since the end of 2004, when the Index had just begun. The reading now stands well above the 100 mark that indicates average growth during recent history, and just over the 110 mark that points to very strong growth. More small businesses are reporting a faster rate of employment growth, and more vacancies are being advertised. This is important, as the UK s small businesses account for a significant share of the country s total employment. In addition, small firms expect to increase their hiring over the next quarter and the next year Note: represents average growth for the period (i.e. the 2008/09 recession and two years either side). Readings above 110 represent very strong growth, readings below 95 Source: point towards Cebr contraction. analysis

5 The Everline Small Business Health Dashboard Indicator Source Latest data Trend Comment Small business confidence Small business credit availability Job vacancies at small businesses Federation of Small Business (Q2) l Bank of England +4.9 (Q2)* l Confidence looks to be plateauing Improving but expected to worsen ONS +37%yy (Q2) l Vacancies on the rise SME cost inflation Aldermore / Cebr +1.1%yy (Q1) l Cost inflation stable Insolvencies Insolvency Service +4.9%yy (Q1) l Small retailer sales volumes ONS +8.4%yy (Q2) l Insolvencies creeping back up again Sales growth at small retailers picking up * Net balance of lenders reporting increase in availability versus those reporting decrease yy means year-on-year change 5

6 The Sharper Focus: small businesses and skills shortages Over 500,000 job vacancies could be worth 18bn to the economy if filled with appropriate skills Almost a quarter (24%) of small businesses surveyed currently have available vacancies. However, 16% had vacancies in the last month that they ve been unable to fill due to not finding a candidate with the required skills. This equates to around 520,000 vacancies not filled due to skills shortages across the UK s small business community Potential annual extra that could be added by small business economy if not for skills shortages versus 2013 GVA of different regions of the UK 15.7bn 17.0bn 18.2bn 19.4bn If the correct skills were available to fill these vacancies, the total economy could be boosted by almost 18.2bn. This is roughly equivalent to the entire output of the head office and management consultancy sector. 5 0 Aberdeen and Aberdeenshire Oxfordshire Potential extra GVA if no skills shortage Leeds 6 Source: Cebr analysis, Everline/Opinium survey, ONS

7 The Sharper Focus: costs of recruitment and training Time spent recruiting and training staff costs more than 3,100 a year of the owner s time Small business owners spend over 100 hours a year on average looking for potential candidates, training new staff and developing existing members of staff. In economic output (GVA) terms, this is worth an estimated 3,160 of the owner s time. If suitably skilled staff were readily available, this time could be spent developing new business. However, younger smaller business owners tend to spend more on these activities than their older counterparts. The additional time that small business owners aged between devote to these tasks costs them over 7,540 in lost output. This compares to around 1,860 for owners aged 55 and over Average Annual worth of owner s labour devoted to recruitment and training (GVA terms) 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Looking for potential candidates Upskilling/Developing existing staff Training new staff 7 Source: Cebr analysis, Everline/Opinium survey

8 The Sharper Focus: overtime across the generations Younger generation more inclined to invest time supporting employees helping to reduce their workload Small business owners aged spend on average 26 hours per month supporting, training and recruiting staff. This compares to just seven hours spent on the same tasks by owners aged 55 and over. With more staff investment, younger small business owners appear more comfortable to delegate responsibilities to other members of staff. As a result, older business owners are more likely to be primarily responsible for a wider range of functions such as marketing, admin. and finance. In addition, they tend to work more hours outside of their standard working day than their younger counterparts Average Hours worked outside standard working day by owner in the last month, by age group of owner Number of hours 8 Source: Cebr analysis, Everline/Opinium survey

9 The Sharper Focus: industry-specific skills A quarter of IT companies unable to fill vacancies in the last month due to skills shortage The tech industry is a key source of growth in the UK at present. The small business section of the sector is no exception, with the Federation of Small Businesses reporting high confidence in the sector. However, the industry is now facing skills shortages. One in every four businesses surveyed from this sector reported at least one vacancy posted within the last month that has not been filled, due to not finding someone with the required skill set. This compares to a UK average of 16% of businesses reporting these issues. This is despite owners in this sector spending more time each month looking for potential candidates than small business owners are currently spending in general. Worryingly there also appear to be an internal lack of skills within the sector. Only 12% of owners in the industry think that their staff are fully trained in every area of their job roles. 9 Source: Everline/Opinium survey

10 The Sharper Focus: industry-specific skills Owners in healthcare and manufacturing/consumer products supporting staff who lack the skills for their role A lack of suitable skills among workers within both the healthcare sector and the manufacturing and consumer products sector is eating into small business owners time. Just 6% of healthcare business owners and 12% of owners in manufacturing and consumer products felt the staff in their business were fully trained in every area of their job role compared with a UK average of 17% of small business owners. As a result, more than half the business owners surveyed in these industries are having to devote time each month to support employees who are not suitably skilled to fulfil their role efficiently, spending on average around 4 hours doing so in the typical month. These training programmes may also be in response to recruitment issues created by an external shortage of skills. In the manufacturing and consumer products sector 23% of businesses report unfilled vacancies resulting from not finding someone with the required skills for the available position. A further 19% of businesses within the healthcare industry report the same issue, with the proportion of responses in both industries above the UK average of 16%. 10 Source: Everline/Opinium survey

11 The Sharper Focus: regional skills Almost a third of small businesses in the East Midlands unable to fill vacancies due to a shortage of skills The East Midlands has one of the highest proportions of employment in production of anywhere in the UK, with 14% of the region s workforce employed in the manufacturing sector as a whole. Some 88,000 of those employed in manufacturing were employed in small businesses in 2013, a third of the total. The region has also experienced one of the fastest increases in employment over the last 12 months, with the workforce expanding by 54,000 employees, and currently has an unemployment rate of just 5.5%. This compares with the UK wide unemployment rate of 6.0%. The combination of a rapidly tightening labour market and a high proportion of employment in manufacturing (a sector which is reporting skills shortages on a national level) is putting pressure on small businesses looking to recruit. Compared with a UK average of 16%, almost a third, 31%, of small businesses in the East Midlands report unfilled vacancies resulting from not finding someone with the required skills for the available positions. The shortage of skilled labour in the region is putting pressure on businesses to devote more time to recruiting. The average business in the region spends five hours looking for potential candidates in the typical month, more than double the UK wide average of just two hours a month. 11 Source: Everline/Opinium survey

12 International comparison of small business economy Although the small business economy makes up an important share of total GDP, in other European countries the share is even higher. On a gross value added* basis, small businesses contribute roughly a third of total economic output in the UK business sector. This compares to 43% in France, or just over half in Norway and Malta, according to European statistics agency Eurostat. 60% 50% 40% 30% 20% Share of small business (0-49 employees) gross value added* in total business economy, average * Gross value added is a measure of economic output, and is roughly equivalent to the sum of business profits, employee compensation and taxes on production (e.g. corporation tax). 10% 0% Romania Poland UK Czech Republic Croatia Hungary Lithuania Bulgaria Austria Sweden EU27 Slovenia Finland Luxembourg Latvia Belgium France Slovakia Portugal Spain Estonia Norway Malta 12 Source: Eurostat

13 Method notes The Everline Small Business Employment Index is compiled using a poll of polls method, which takes into account employment metadata from the ICAEW/Grant Thornton Business Confidence Monitor, the Federation of Small Business Voice of Small Business report, and the Office for National Statistics (ONS) job vacancies by firm size statistics. The Everline Small Business Output Index is compiled using similar approach, taking into account sales volume data from the ICAEW/Grant Thornton Business Confidence Monitor, revenue data from the Federation of Small Business Voice of Small Business report, and sales volume data from the Office for National Statistics retail sales by firm size bulletin. Other findings in the report are calculated by Cebr using the results of a bespoke survey commissioned by Everline and carried out by Opinium Research between 27 th August and 4 th September, and data from the ONS and the Department for Business, Innovation and Skills. 13

14 Contact For more information on figures contained in this quarter s Everline Small Business Tracker, please contact: For press enquiries and corporate information: Emma Harvey Emma@everline.com Emily Cunningham Emily@everline.com For data enquiries: Rob Harbron, Senior Economist rharbron@cebr.com Sam Alderson Economist salderson@cebr.com Charles Davis, Director cdavis@cebr.com