SMBs’ Focus On Financial Expertise Leads Growth Strategy

Small business lending in the U.K. took a major downturn in July, according to new figures, with financing dropping by $900 million in a single month. According to the Federation of Small Businesses’ Head Mike Cherry, the trend is both a reflection of declining demand for external financing and a result of the European Investment Fund continuing its pullback from U.K. borrowers following Brexit.

“A botched withdrawal from the EIF and EIB would turn a currently mixed outlook into a decidedly bleak one,” Cherry said a statement. “We need to see small firms confident to apply for finance for growth, with the government clearly mapping out what will eventually replace the half a billion pounds of EIF support received in recent years.”

There is evidence that small businesses in the U.K. want to grow, and even if they’re not applying for a business loan, they’re looking to stretch their wings in other ways.

A new report from recruitment consultancy firm Robert Walters found that small businesses are looking to hire financial professionals across a range of business departments, including regulatory compliance.

“The role of finance functions has broadened in recent years, with businesses looking for staff who can demonstrate business acumen in order to provide valuable commercial insights to senior managers,” explained Robert Walters Associate Director Marcus Blackburn. “In particular, as businesses prepare for a period of transition as Britain negotiates its exit from the EU, mid-level finance professionals who can provide insights to ensure long-term financial viability are highly sought after.”

Data compiled by Real Business from Robert Walters, recruitment agency Morgan McKinley and TheCityUK offer a glimpse into small businesses’ hiring strategies as they seek growth in a market marked by uncertainty.

• 61 percent of SMBs want to hire mid-level accountants, found Robert Walters, though junior level hires are also in high demand with 52 percent of SMBs reporting they are seeking this type of professional.

• A year on year 33 percent decline in job seekers, coupled with an 11 percent decline in jobs available, means small businesses are struggling to find the talent they need to fill their gaps in financial expertise. Luckily, says Morgan McKinley, there has been a month-on-month increase in both of these categories, suggesting the hiring challenge may be easing up.

• 2.2 million professionals are employed in the financial services sector in the U.K., but two-thirds are employed outside London, according to TheCityUK. According to Morgan McKinley Financial Services Operations Director Hakan Enver, this is a result of Brexit. “The city of London is still hemorrhaging talent because of Brexit, and we risk losing jobs too.”

• 27 percent of SMB owners knew instantly where they wanted to set up shop, said recent research from Opus Energy. An additional 29 percent decided within a week. Researchers noted that the location of a small business may have an impact on its ability to grow and succeed — younger entrepreneurs are more likely to consider talent in their local areas. Still, less than 10 percent of small businesses are established in business zones or clusters, in which like-minded entrepreneurs can collaborate and set up a community.

• 205,325 businesses were set up in London last year, out of a total of 650,000 startups launching across the U.K. While the competitiveness of London remains strong, researchers at Opus Energy noted that it is also growing in other cities, including Leeds and Manchester.

“Setting up a business is not a small undertaking, and there are many important decisions to be made before a company is born,” said Nikki Flanders, Opus Energy chief operating officer, in a statement announcing the research. “Regional initiatives are available to businesses to help them progress — for example, the government’s Regional Growth Fund or business grants from local councils — so it’s worth investigating a range of locations for your startup, even if they’re not so convenient.”