Poor leadership hits small business while confidence sinks to two year low
A lack of strong leadership, primarily caused by a “soft skills gap”, is preventing SMEs from tackling the myriad of challenges they face, according to research.
The news comes as a double blow to SMEs as research by Hitachi Capital Finance has found the number of firms predicting growth has fallen to 34%, a two-year low.
A third of business leaders cite soft skills, including emotional intelligence, communication and collaboration, as the most crucial requirement for leadership roles. They have become particularly important as the Brexit turmoil in Westminster continues to create economic uncertainty, and ongoing digitalisation becomes an increasing challenge.
“SMEs planning for the future will need strong leadership now more than ever to cope with economic uncertainty, ongoing digitisation efforts and increased competition,” said Matt Weston, MD of Robert UK.
“To build out their teams and overcome the skills gap, many businesses are now adopting flexible recruitment strategies so they can move quickly to secure their desired candidates. Developing a strong pipeline of talent and planning succession carefully in advance will ensure companies cultivate a strong leadership team – one that is capable of navigating through uncertain times,” he added.
Indeed, With SMEs the backbone of the UK economy, accounting for £2 trillion annually, poor leadership has the potential to cause a significant negative economic impact.
When looking at implementing new digital solutions, two in five say their leadership team is resistant to change, a further two in five say they have poor soft skills, while three in 10 cite a lack of communication.
The need for strong leaders in SMEs is made all the more important when confidence is so low amongst businesses. There is also a 2% drop for firms predicting significant expansion, down to 4% from 6%.
Gavin Wraith-Carter, MD at Hitachi Capital Business Finance felt uncertainty was to blame and called for banks to provide solutions.
“We are all living through a period of unprecedented uncertainty and, within that context, it is not surprising that small business confidence has taken a knock. It is too early to tell whether this is a short-term blip or the start of a trend,” Wraith-Carter said.
“The crucial subtext is how small businesses are reacting to how they are feeling. What is encouraging from our research is that whilst around four in five small businesses can identify current challenges, the vast majority are adapting by making new plans to achieve future growth,” he said.
“Investing in new equipment, expanding into overseas markets and tackling late payment are key issues that small businesses are prioritising to move their businesses forward – and now is a vital time for the banking and specialist finance community to be backing the small businesses that have the ideas, the plans and the passion to see market uncertainty as an opportunity to grow.”