7 drivers to boost small business productivity » SMEInsider

7 drivers to boost small business productivity

When the economic crisis hit, productivity fell sharply. While it has rebounded elsewhere, small UK businesses are lagging behind their counterparts in G7 countries like France, Germany and the US.

Recent FSB research shows that small firms’ productivity levels finally began to turn a corner at the end of 2014, but UK productivity levels are currently 17 per cent lower than the G7 average.

In a report supported by the FSB, the All Party Parliamentary Small Business Group has identified seven drivers to boost the productivity of small businesses.

1)   Incentivise business investment

Simplifying the business tax system, setting the Annual Investment Allowance and other investment incentives at attractive and stable levels, and improving access to finance will encourage more firms to invest in new products and processes. This in turn will drive productivity gains and business growth.

 2)   Universal access to high quality, affordable broadband

Digital technologies are fundamentally altering the nature of business, and firms that aren’t connected will struggle to grow and even survive. Better broadband for small businesses is essential if the UK is to compete in high-value global markets and close the productivity gap with our competitors.

3)   Invest in regional growth

Investment should be targeted on infrastructure to connect regions and create new opportunities for local firms, while Local Enterprise Partnerships need to be strengthened and made more locally accountable if they are to become better agents of economic growth in England

 4)   Support innovative businesses

To help knowledge transfer to the private sector Government should increase the Higher Education and Innovation fund to £250 million. The application process for businesses to access tax credits for research and development should be improved, and equity investment, which is beneficial to these businesses, should be promoted.

5)   Address skills and training shortfalls

Government and business should work together to increase the number of high quality apprenticeships, forge closer links with local schools and universities, and encourage more small firms to invest in training to upskill their workforce.

 6)   Ambitious public procurement policy

We need to see more small businesses bidding for and winning public sector contracts to drive competition and innovation, and deliver new growth opportunities for local firms. The National Audit Office should publish regular performance data on the number and value of public contracts going to small, medium and micro-firms.

 7)   Get more businesses exporting

UK Trade and Investment should be supported for the long-term so it can adequately support small and start-up businesses’ ambitions to export, while the British Business Bank should also play a greater role in providing tailored export finance to small firms.