They’re punching above their weight and highly ambitious. So why are the UK’s mid-sized businesses struggling to grow?
Mid-sized businesses (or MSBs) are a massive contributor to UK PLC. With one in six private sector workers employed by MSBs, they’re vitally important to our nation’s employments prospects.
MSBs are also a key economic driver. Thanks to their high productivity – productivity per MSB employee is higher than in any other segment – they are also making a significant impact on the nation’s deficit-surplus balance. Those one-in-six workers contribute over one fifth of private sector revenues. By contrast, SMEs employ almost half the population (48%) but only contribute a third of revenues (36%). Meanwhile, with over a third of the UK’s workforce (36%), corporates contribute just over two-fifths of its revenues (42%).
Despite these positive statistics, things aren’t entirely rosy for Britain’s MSBs. Ambitious though they are, MSBs are being held back from significant growth in the immediate future by a range of factors.
The challenges of recruitment and retention
Many MSB leaders report difficulties in recruiting the staff they need, with technology, sales and operations posts proving the hardest to fill. So it’s clearly important that businesses retain the talent they already have. The provision of more enjoyable workspaces and training opportunities can help, as many MSBs already recognise. But it appears they’re not yet taking full advantage of the opportunities offered by flexible working.
As the Perspective series report ‘The Fluid Society: Working Without Boundaries’ uncovered, 79% of full adopters of flexible working say their employees are more satisfied and enjoy a better work-life balance. 71% say their employees are more satisfied, 71% save time in their working day and 69% have experienced improved employee productivity. Despite this, only a quarter of UK MSBs currently offer truly flexible working.
Technology – an investment priority
Of course, for flexible working to work, businesses need to invest in appropriate technology. The majority of MSBs recognise that they are lacking up-to-date technology (16%) or, more commonly, they have the right technology but are not using it to its full potential (39%).
Instead of investing in technology, MSBs appear to be focusing resources on research and development (R&D). However, with technology systems now struggling to keep pace, MSBs may find that, without investment, the lack of technological infrastructure and systems needed to realise the potential of these innovations may stall progress.
Introducing tax breaks and Government grants would provide compelling motivations for MSBs to increase investment in technology. Another strategy many MSBs may find useful is to work in partnership with a technology provider, rather than attempting to solve all their tech challenges in-house.
Perceived lack of Government and financial support
We live in competitive times. From large incumbent competitors to the thriving start-up community, competition is rife. Within this crowded environment, MSBs believe they are placed at a disadvantage compared to their larger and smaller counterparts. In particular, they feel that they face challenges with little support from the Government and financial institutions, and are subjected to too much regulation and cumbersome legislation.
However, it is encouraging to see a renewed focus on providing these businesses with the support they need to compete successfully, now and in the future. MSBs’ ambitions need to be actively supported, encouraging them to invest in the right technology to enable them to develop flexible working practices and deliver seamless user experiences across multiple communication channels. This will enable MSBs to retain and attract the best talent and adapt to shifting customer expectations – allowing these important businesses to thrive in the years to come.
There can be no doubt that MSBs are the engine room of UK PLC. Tom Thackray, Acting Director of Competitive Markets at CBI, believes the connection between MSBs’ success and the prospects of the UK economy overall cannot be overemphasised. “The UK’s mid-sized companies are vital to our future economic prospects. In a tough, highly competitive international environment, it’s vital they get the right support at the right time.”
It seems that as a nation, we need to support our MSBs to enable them to invest in the right technology and the right talent so they can grow and achieve their goals. And doing so will prove a good investment for all of us.