In the latest research conducted by the Federation of Small Businesses (FSB), it was found that small businesses need innovation to narrow the productivity gap. As a result of this research carried out, the FSB are calling on the government to introduce a new tax credit. The lack of innovation within the UK small business sector is worrying and is having a negative impact on the overall productivity. With innovation, small businesses can grow and thrive.
Many businesses are being held back by the lack of time and finances available to them. This was the reason cited for 24% of small business making no significant changes in their business, whether this is in their products or the way they work.
Small businesses that are likely to innovate are doing it through using a new software or change to the organisational structure or changing up the marketing strategy. Only 25% of small business innovate though market-changing products. Innovation doesn’t have to be groundbreaking or business changing, it can be small ways to improve the way a business is run.
It was a positive finding that around 76% of small businesses that participated in the research did innovate and make changes in their business in the last three years. This proves that the vast majority of small businesses are capable of making a positive change. If they were to get additional support, the percentage could be higher.
Just under a half (43%) of small businesses are wanting to implement changes in their business, however, are held back due to lack of time. 37% of the small businesses do not have the skilled employees needed. Another 27% reported, that they were unsure if the short term disruption was worth the long-term benefits.
Martin McTague, FSB Policy Chairman, said: “Think of innovation and introducing new, market-changing inventions might spring to mind. While these are undoubtedly important, our research shows that changes made within a small business can have a huge impact on their productivity. This could be a basic change to their software or cloud-based services, or even their organisational structure or marketing process.
“We are calling for Government to explore putting in place a tax credit for those time-poor small businesses that can’t afford to take time out of their everyday businesses to take part in training. With half of those firms considering making changes, citing a lack of time as a major barrier, this could significantly enhance these figures.”