FSB Quarterly Index: Small business confidence grows but a third of firms warn about skills

Monday June 22nd 2015

Federation of Small Businesses

The availability of skilled staff is a worry for one in three Scottish small businesses, according to the latest FSB Small Business Index. The report also reveals that while Scottish confidence tracks behind the UK average, a growing balance of Scottish FSB members believe that business conditions are set to improve.

The Scottish Small Business Index, the FSB’s measure of business confidence, rose from +20.4 points in the first quarter of the year to +28.5 points this quarter. The UK Small Business Index also rose this quarter from +28.7 points in the first quarter to +37.9 points.

The research finds that the falling price of fuel and utilities has eased cost pressures on small firms. Scottish small businesses also report increased revenues and profits – with an increasing proportion of firms highlighting growth in wages. Investment intentions are also firming up, with a net balance of 23 per cent of firms expecting to increase capital investment over the next year, up from 15 per cent in the previous quarter.

Andy Willox, the FSB’s Scottish policy convenor, said: “Scottish small business confidence is picking up but remains behind the level recorded a year ago. And, while the long term trend looks good, decision-makers need to reinforce their links with local small enterprise if they really want to understand how their community, local economy and the country, ticks.”

The research reveals that this quarter about one in three businesses (31%) reported that staff skills were a potential barrier to the growth of their business.

The FSB in Scotland is supporting new initiatives across Scotland to develop better relationships between education and enterprise – a key recommendation of Sir Ian Wood’s Commission for Developing Scotland’s Young Workforce.

Andy Willox said: “It is alarming that one in three Scottish small firms report that a shortage of skills could be a potential barrier to growth when there are still 163,000 Scots unemployed. New forums, designed to develop better links between industry and education, are a welcome initiative but they can’t be the end of the story. Extra effort must be applied to tap the potential of the smallest businesses.

“Small firms especially value soft skills: we’re often looking for people with the right attitude, not just the right certificates. We need people who can manage their own time and work comfortably with customers and colleagues. Educators alone can’t solve this problem – the business community has a big role getting young people ready for the world of work.”

The small business lobby group also highlights Scottish Government research showing that three quarters of Scottish businesses believe digital growth is critical to their business, but only 2 in 5 believe they have the requisite digital business skills.

Andy Willox added: “Though not specifically tracked in the index, the digital skills needs of business are changing rapidly. Employers, employees and educational establishments will need to work together to ensure that all sorts of firms can capitalise on the digital revolution. And that means ensuring that the right help is available for those who are currently in work and looking to upgrade their skills.”

You can read the full report HERE.

The Federation of Small Businesses (FSB) in Scotland represents the interests of around 19,000 Scottish members, see www.fsb.org.uk/scotland

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