Business confidence returning to West Midlands SMEs – new study

BUSINESS confidence is starting to return to SMEs in the wider Birmingham region, new research suggests.

Almost 40% of SMEs have increased their turnover during the last 12 months, while only 23% experienced a decrease. More than a quarter (26%) took on more staff over the same period, according to research issued by the Marketing Birmingham Regional Observatory and the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP).

SMEs in the GBSLEP area and the Black Country coped relatively well with the economic downturn, with over half (53%) reporting growth in profits over the last three years. Moreover, two thirds (66%) have maintained or increased their turnover.

Neil Rami, chief executive of Marketing Birmingham, which now operates the Regional Observatory, said: “It has been said that SMEs are the lifeblood of the UK economy and a barometer for business conditions.

“If so, our findings indicate that the local business community could be looking more confidently to the future and are ready to explore opportunities to develop their operations. This is encouraging as where confidence exists, growth often follows.”

The research, which surveyed 1,700 businesses across the GBSLEP area and the Black Country, took place between December 2011 and March 2012. It looked at SME growth over the past year, attitudes to future growth and employment, and the sectors with the greatest incidence of ‘high growth’ businesses. Birmingham and the Black Country are home to nearly 80,000 SMEs.   

Demonstrating their resilience, nearly half (46%) of SMEs in the region have not changed their staffing levels in the last three years despite the challenges of the economic landscape. More than a quarter (26%) actually employed more people. Just over a quarter (27%) were forced to reduce headcount over the same period.

Showcasing a renewed confidence in the market, the majority (53%) of respondents expected to increase their workforce over the next year, with only 5% planning to reduce staff levels.

Skills and training were identified by nearly a third (28%) of respondents as a key driver of growth with management, leadership, marketing, business development and IT topping the requirements of ambitious SMEs. One in eight (12%) went as far as to cite skills deficiencies and recruitment problems as restricting business performance.  

Despite the importance of skills, it appears times are still tough with less than half (47%) of surveyed SMEs planning to increase training in their organisation over the next year – although only a small proportion (2%) are expecting to cut back on this investment.

Alan Volkaerts, GBSLEP board member and Operations Director at Jaguar Land Rover’s Solihull plant, said: “Developing an innovative approach to tackling the issue of improving skills levels is one of the LEP’s key economic priorities. We have already launched the LEP Employment & Skills Board, which is a private sector led collaboration featuring companies, the public sector, education and training providers.

“It will act as a ‘Skills for Growth Hub’, developing and embedding long-term relationships that ensure skills training is in line with employer demand, young people have access to real world careers advice and that business links with schools is much improved.

“If we are to achieve our desire of making the Greater Birmingham and Solihull area globally competitive, we have to ensure the skills agenda is at the forefront of everything we do.”