While uncertainty has been plaguing politicians and keeping businesses on their toes, many business owners are quietly optimistic about the future in 2019. Credit Safe’s 2019 Business Census found that fully 90 percent of businesses expect to grow their turnover this year. While the public discourse has been dominated by national issues, less than one third of businesses claim that Brexit has negatively affected their business thus far. However, this does not mean that businesses aren’t facing entirely different challenges in 2019.
UK businesses are doing well, but going forward that success will depend on their ability to manage issues surrounding recruitment and financing, apart from the larger economic uncertainty caused by the country’s more political activities. Most notably, UK businesses are facing a growing skills shortage that has already kept them from hiring the workers they need, even as the economy, and UK businesses, have continued to succeed.
Most businesses plan to grow their teams this year
In 2018, two thirds of UK businesses grew in size. While turnover grew for a large majority of businesses though, only 46 per cent of businesses also grew their teams during that time. While some of this reflects the growing efficiency of businesses, it’s also a result of the UK’s growing skills shortage. Many businesses simply can’t find the right talent for their businesses, and are forced to make do with the people they have.
As these businesses continue to seek to grow this year, many who resisted in 2018 will find themselves forced to find talent to fill those new positions. It’s because of this disparity between growth and hiring that businesses cite recruitment as their biggest challenge for 2019.
Managing the challenges to UK businesses in 2019
The UK’s skills shortage is growing more serious as time passes, and businesses are taking notice. In 2018, 31 percent of businesses outsourced jobs, often in IT, marketing, HR, accountancy, and support positions. This growing trend is expected to continue, though it only partially addresses the issue. After all, other developed countries are facing skills gaps in the same fields. Also, many positions can’t be executed remotely, and need to be filled locally.
Recruitment is held back by slow wage growth
One reason that UK businesses are having so much difficulty with finding candidates is the country’s slow wage growth. According to the Trades Union Congress, real wages in 2018 were still far below pre-2008 averages. After the recession, UK wages continued to fall until 2014, and have only partially recovered since then. The weakening of the pound in recent years has only exacerbated the issue.
As a result, the UK’s average net salary of €1990.00 per month now ranks 10th in the EU, well behind Germany and France with €2270.00 and €2225.00 respectively, and a full 30 per cent below the Denmark’s top-ranked €3270.00. Not only does this create a pull factor in Europe, drawing UK skilled workers out of the country, it also makes it much more difficult for UK businesses to attract skilled foreign workers, or to employ foreign workers who could earn more by taking a job locally.
Addressing the financial and economic concerns of UK businesses
General economic uncertainty, mostly revolving around Brexit is cited as the second most significant challenge for businesses. That uncertainty can only be resolved by the UK government, and is best addressed on a more granular level by focusing on the third item on our list: financing concerns.
In order to overcome both staffing and economic challenges, businesses need effective and flexible financing solutions. With the UK’s interest rate bump in 2018, and a generally conservative attitude among major banks, however, businesses don’t have the increased access to funds that they need from their primary lending institutions.
In order to realise their growth goals, businesses need to supplement their traditional resources with more flexible solutions, such as Fifo Capital’s invoice finance, and supply chain finance tools. These make it possible for businesses to consolidate existing capital or to access additional funds in order to manage a wide variety of financial challenges.
UK businesses are still growing, and positive sentiment among business owners is very promising for 2019. In order to realise the potential offered by these businesses, however, it’s essential that they have the tools to meet the challenges that 2019 will bring, from economic changes, to ongoing recruitment and financial difficulties.