The importance of entrepreneurship and high-growth, small businesses to the economy has been understood for some time; and, as 2014 draws to a close, confidence in this sector continues to rise.
Several recent reports support this, including the latest Barclays and BGF Entrepreneurs Index, whose research has shown that the number of active companies in the UK grew by 3.9% in the first six months of the year – its highest level since the index was created. However, the Barclays and BGF study also revealed that a number of businesses appeared to be struggling to grow beyond a certain level, indicated by a levelling off in the percentage of high-growth companies.
Some of the reasons cited for this included limitations in product and service offering, inadequate finance or inability to access international markets. Another suggestion was that these ventures may lack the necessary management experience to scale the business.
This latter point is echoed in the findings of the Octopus High Growth Small Business Report 2014, in which 22% of small businesses said that finding talent was a barrier to growth – with 1 in 5 stating that they have difficulty finding the right people.
So, why is talent such an issue? There are a number of factors that can make it difficult for today’s high growth businesses to access the best candidates. Not least of which is the fact that it may be a symptom of growth itself. As markets, both domestic and international, continue to recover, the global demand for top performers is increasing exponentially – creating a skills shortage in its wake.
This issue is not just the concern of small businesses. PWC’s 17th Annual CEO Survey, which canvasses over 1,300 CEOs (including those at the helm of some of the world’s biggest organisations) reported that 87% of Chief Executives were in the process of updating their talent strategies.
As such, smaller entities are finding themselves battling it out against the blue chips in the race to find and attract exceptional people. This can often put them at a disadvantage, without the finance and profile to make a competitive offer. However, it is possible for small businesses to craft a compelling proposition in its own right by offering something that larger organisations often cannot: be it equity, the chance to work with ground-breaking IP or the opportunity to be a true figurehead in shaping the company’s success story.
The ability to attract and retain top talent is vital but it is an arbitrary point unless that talent can be sourced in the first place. The aforementioned increase in competition, set against an ever-changing economic and technological landscape, has created a real skills scarcity across a number of key markets. Businesses are having to be much more creative in their approach to bringing in new people. For example, going outside of their immediate sector to find complementary skillsets which, on the face of it, could be seen as a compromise but can often inject a valuable new perspective to a leadership team. Likewise, flexibility with regard to the terms of the appointment can uncover even more talent options – for instance, considering employing someone in an interim or non-executive capacity, or with the option to work remotely.
One of the key trends of the past 12 months has been the increased demand from businesses looking beyond domestic shores to find the talent to help them realise their ambitions. This has, in part, been fuelled by the growing emphasis on international expansion but it has also been caused by the dramatic evolution in the way that we work. As communications and technologies advance, remote and flexible working arrangements becoming ever more commonplace and the need to employ people within a commutable distance of the office is growing less necessary.
The war for talent only looks set to intensify as global recovery continues, however, the agility and adaptability of high-growth businesses may still see them emerge victorious. According to the Octopus report, high growth small businesses were responsible for 68% of employment growth between 2012-13, suggesting that, whilst finding and attracting talent can be an obstacle, it is not always a blockade.
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