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UK productivity trails G7 competitors

Whilst improving productivity in the UK remains one of the main goals of the Governments Industrial Strategy, the productivity measure of GDP per hour in 2018 was 19% below the 2008 pre-crisis trend level.  The UK is trailing almost all the G7 nations at sixth place out of seven.

Only a few SME’s are capable of significant growth

Businesses with less than 250 employees account for over 99% of private sector business in the UK, 66% of all private sector employment and 73% of all net private sector job creation.  However, many of these businesses are only focused on remaining in business. They do not have significant growth ambitions, they are not high growth businesses seeking to step change their productivity.  Only 6% of these businesses who employ more than 10 people can be characterised as high growth firms and 1% of these businesses account for 20% of job creation.

Three main barriers to growth

Three barriers to productivity improvements: First, identifying the potential high growth businesses so that they can be supported; Second, access to funding for these high growth firms is proving difficult, UK investors are more reluctant than their counterparts to make equity investments in relatively high-risk SME’s; and Third, there is a causal relationship between poor UK management practices and poor productivity.

Access to funding is holding back productivity growth

Access to funding is thought to explain about 18% of the relative productivity gap.  Four banks in the UK account for 80% of the SME loan market so competition is limited.  Most SME’s fund their activities through a combination of overdrafts (42%) and credit cards (40%).  UK SME’s use less equity from third parties than their G7 counterparts.

Poor UK management practices are a significant barrier to growth

Poor management practices account for a whopping 55% of the relative productivity gap.  The main reasons are an inadequate supply of quality managerial capital; inadequate worker skills; and a lack of knowledge of what changes to make in order to improve productivity.

Management really matters

Research studies over 15 years and involving 12,000 businesses across 34 countries shows that upper decile companies are twice as productive as the lowest decile equivalent.  UK businesses do not invest as much in job training as their European counterparts.

How we can help

Our team of consultants with their experience and rigorous analysis can help “make ready” ambitious SME’s willing and capable of growth.  We have a multi-disciplinary group of experts who can address a wide range of challenges. We have a track record of enabling and delivering growth across a range of businesses and sectors.

We can help access to funding

Our team includes experienced FD’s who can conduct financial health checks; working with colleagues they can develop and help implement improvement plans; get clients investor ready, and help with introductions to sources of funding.

We can help improve management practices

An experienced team of improvement consultants; can help benchmark your business; develop improvement plans and engage experts with the skills and knowledge to enable and embed improvement in the key areas.

Learn more and get some help

If you are an ambitious SME and want to learn more about how we can help you improve your productivity and grow, then get in touch a confidential no obligation discovery conversation.

Many businesses will see more disruption in the next five years than they have in the last twenty years, according to a recent McKinsey report.  

And product life cycles are shortening

Many sectors are seeing the shortening of both product and business life cycles.  This makes it harder for businesses to get a good return on their investments. Winners inevitably are those that get their brands established fast and create scale fast either organically or through market consolidation.

So, what are the key areas for business leaders to focus on?

We think that there are four areas to get right to succeed in these ever-changing and increasingly competitive markets.

1. Clarity of strategy

Spend time getting the vision and goals clear, shared and understood throughout the entire team.  Be flexible, keep them under review, this will ensure their ongoing relevance and enable the business to seize opportunities as they arise.

2. Enabled structures

The organisation’s structure is important with clarity of roles and responsibilities, clear accountability and transparent measures.  Equally important are the external structures, the efficient and effective engagement with customers and suppliers creating an ecosystem of partnerships.

3. Fit for purpose processes

Built upon standardised ways of working and embracing the philosophy of continuous improvement.  Process owners with transparent measures enabling rapid decision-making in pursuit of delivering the vision faster and better than any other alternative and all enabled by the latest fit for purpose technology.

4. The right resources

Stakeholder engagement through belief will ensure commitment and enable both capital and human resources are available and engaged on delivery of the business vision.  Leadership and role mobility will help the enterprise deploy resources when and where required.

Your next step

We can help you get the right focus and plans in place and then work with you through the implementation of the agreed plans.  

If you would like a confidential discussion on how, then get in touch.

Getting started as a business consultant can be a challenge. Whether starting out or looking to step change your business we have a programme that can help and support your journey.  Just drop us an email and we will be in touch.

Understanding the stages that most businesses go through will help their leaders be better prepared to deal with the challenges of growth.  We have prepared a short document that will help leaders face these challenges.  Contact us for further details and we will share some interesting insights. 

ROCKET uses the latest and best of breed gaming simulation technology, bringing all the benefits of experiential learning to training, assessment and team transformation.
As Confucius said, “I hear and I forget, I see and I remember, I do and I understand”.
This is a highly flexible business game for 5 to 15 people and held on one day. The key benefits include:
    Improving business acumen
    Improving problem solving
    Helping team building
 A safe and fun environment
    Experimenting with strategies
    Helping to identify leadership talent; and
 Developing understanding of process improvement

We can facilitate ROCKET along with our colleagues from HEART of business, click here for more details on ROCKET, or contact us to discuss your requirements.

Many business owners find themselves held back by the lack of funds to scale their business.
The recent 2017 SME Finance Monitor conducted by BDRC on behalf of High Street banks reveals that the trend is away from bank debt, with only 1 in 3 willing to consider this option, which compares with 1 in 2 from the survey two years earlier.
We can help business owners and directors seeking funding in a number of ways. Working with colleagues and our partners we have a wide range of options that can be considered.
Funding for Growth is a service we can offer.
Contact us for a confidential discussion.

Many business owners hit a plateau, requiring some external intervention. We can help you reset your goals and achieve them with a Discovery Conversation on Strategic Options.
Managing an SME can be challenging. Creating, developing and managing a successful business requires many talents, and most of us need help along the way.
The Discovery Conversation on Strategic options is designed to explore and evaluate options that are both organic and inorganic.
With experience across the range of options we can help and working with expert practitioners we can also engage others to help with further evaluation and implementation of the chosen option(s).
Contact us for more information and a confidential discussion.

Social media is now an integral part of the corporate communications mix, and corporate content drives social media engagement. UK companies are failing to engage their audience with the same success as US companies further details here.

There has been growth of 33% over the last 5 years in the UK medium sized business market.  This sector accounts for less than 1% of all firms and delivers more than 33% of the UK's revenue - over £1 trillion - and accounts for one in four jobs in the UK.  Full details in this report.  How do you compare with this average?

Tax considerations in 2015 for SME’s - headlines

For the business:

100% Business Rate Relief for rateable values below £12,000.

Employment Allowance on Employer National Insurance worth up to £2,000.

Only 10% Corporation Tax through patent Box Scheme.  SME’s can claim a lower rate of Corporation Tax on profits earned from patented inventions.

Claim up to 32.6% of R&D costs back through R&D Tax Credits.

For Investors:

30% tax relief through EIS on investments up to £1m; and

50% tax relief through SEIS on investments up to £100k.

Personal:

Personal tax allowance increases to £10,600 in 2015/16; and

ISA Allowance increases to £15,240 in 2015/16.

Networking: why bother?

Business research shows the real benefits of networking, and why should we be investing in developing our referral skills ahead of other forms of advertising.

We typically trust word of mouth referrals more than any other source.

Traditional channels continue to be trusted more than “on-line” channels.

Word of mouth business referrals typically result in:

·         Higher order conversion rates on web sites (up to 75% higher)

·         Greater likelihood of repeat business (up to 37% higher)

·         Greater customer lifetime value (up to twice the value).

The table below compares the extent we trust referrals by “word of mouth” with other forms of “advertising”.

Source: The Nielsen Company 2013.  % scores relate to completely trust and somewhat trust scores – global averages. 

Social media : What they are, and how you can use them

Facebook: Facebook is a popular free social networking website that allows registered users to create profiles, upload photos and video, send messages and keep in touch with friends, family and colleagues. Allows you to build communities and brand pages to consolidate your content and share it with your own community/fans as well as groups.

Google Plus: Authorship, rather than backlinks, is a big part of Google’s search engine now. Google+ brings popular social-media features like comments, photo- and music-sharing, video-chat, etc. to your social circles. It's basically what any user chooses it to be, from an ongoing conversation to a platform of self-expression, with tools for making it as individual or collective as you want. Google Plus participation builds up your Authority Ranking which, in SEO, is now more valuable than Page Rank.

Instagram: Is a fun and quirky way to share your life with friends through a series of pictures.  As a picture sharing platform, instagram can allow you to share the experience of events and moments with a large audience.

LinkedIn: A business-oriented networking service.  Allows you to communicate your professional accomplishments, and write articles as a ‘subject matter expert’ in a professional community.

Pinterest:  A web and mobile application that offers a visual discovery, collection, sharing, and storage tool. Users create and share the collections of visual bookmarks (boards). Boards are created through a user selecting an item, page, website, etc. and pinning it to an existing or newly created board. Pinterest Boards are a great platform for sharing visual content like branded inspiration Meme’s, mood boards and infographics.

SlideShare: A Web based slide hosting service, a presentation platform for sharing portfolios, whitepapers, slideshows and infographics that demonstrate your knowledge or skills.  Users can upload files privately or publicly. 

Twitter: Twitter is an online social networking service that enables users to send and read short 140-character messages called "tweets". Registered users can read and post tweets, but unregistered users can only read them.  It provides the opportunity to share multimedia content and engage in one to many, or many to many, micro-conversations.

YouTube:  A video distribution platform for original content creators and advertisers large and small. The opportunity to discover, watch and share videos.  To create your visual presence and personality with large audiences.