The Importance of Micro, Small and Medium Sized Enterprises.

 

A definition of micro and SMEs.

Micros and SMEs defined as follows – micros: 1-9 employees, Small: 10-49 employees and Medium: 50-249 employees.

I include sole operators in the definition of micros.

The key to prosperity.

The importance of micro and SMEs cannot be over emphasised. They are central to the country’s economy and in the future will play an increasingly strategic role in rebuilding and rebalancing the economy. They also could be a much greater player in creating high quality apprenticeships.

The government seems to recognise the importance of apprenticeships and is promoting them as playing a central role in addressing and solving the current skills gaps/shortages and the high levels of youth unemployment. The government also seem to highlight the importance of micros and SMEs but the reality is very different. In spite of statements by successive governments very little has been done to support them. These enterprises are trying to survive in the current hostile financial and competitive market and urgently require long term and meaningful support from the government and not just sound bites, empty rhetoric and tokenistic gestures. To date innumerable initiatives and campaigns extolling the importance of micros and SMEs have come and gone without any lasting impact or improvement. In addition successive governments have launched a number of glossy marketing campaigns extolling the virtues of SMEs and apprenticeships which again have had little positive outcome.

We wait with great anticipation following the appointment of a new Minister for small enterprises in the current government noting she has experience in such enterprises. In addition to this appointment the government has announced “a new industrial strategy” but we have heard this many times before from previous governments with no lasting positive impact.

Overall there have been very few politicians or their advisors who have been involved directly or indirectly in such enterprises and as a result their knowledge and appreciation of such industries is minimal. History also shows that political parties are more supportive towards and involved with the larger and multinationals company’s.

A good example of this indifference is the current development of apprenticeships. Micros and SMEs have to confront a number of challenges when getting involved with apprenticeships many of which could be removed with government support. Factors such as constraints of time, human and financial resources and the poor availability of high quality of broad band on which many micros and SMEs depend. These elements and others make it difficult for them to get involved with apprenticeships and there must be a greater recognition and positive action by the government in recognition of their importance and the strategic role that they could play. Long term financial support is urgently required by from government coupled with a significant reduction in administrative burdens that are imposed on small businesses.

Equally important, the micros and SMEs need to improve their profile by creating a single voice to articulate and hence lobby their role and importance to the national economy and the emerging apprenticeship programmes. This is even more pressing following the EU vote and the Micros and SMEs must be involved and play a significant role in influencing the negotiation of operating terms with the EU if this country is to leave the Union.

Currently the take up of apprenticeships in Micros and SME’s is low and could be much higher if more support is given to them. The last two governments were far more supportive of the larger enterprises like IBM, British Gas, Royal Royce and Sky in developing apprenticeships; it is time to change the emphasis.

Plumbing and heating engineering is a good example of a strategically important profession which has approximately 100,000 SMEs with 60/70% falling within the micro’s definition. This trade would greatly benefit from high quality apprenticeships that would greatly help the current skills gaps and shortages in the profession. Similar problems exist with other strategically important technical and practical occupations.

Summary

  • In order to support Micros and SMEs administrative burdens such inspections, planning and procurement and other bureaucrat procedures must be significantly reduced or removed altogether.
  • Improve the broadband coverage across the country and its strength. Currently Britain is very low on international tables for these essential services and technologies and in spite being the 5th in terms of global wealth it is 54th in terms of coverage, capacity and 4G ratings. It will take a long time to increase the ratings for ITC. SMEs especially need greater coverage, greater capacity and 4G technologies.
  • They must play a significant role in the proposed new industrial strategy recently announced by the government and work closely with the new Minister and her Ministry.
  • Establish systems to enable them to access finance more easily from banks and other financial organisations.
  • The introduction of financial incentives to increase research and development within Micros and SMEs.
  • Assist micros and SMEs to develop and improve their ITC skills*
  • Introduction of more favourable tax regimes and business rates coupled with a recognition and greater appreciation of the challenges confronting Micros and SMEs.
  • Government to review the level of corporation tax imposed on micros and small enterprises
  • Support them to massively expand apprenticeship programmes by reducing bureaucratic procedures and financial levies that are imposed on them.
  • The enterprises must create a single voice to raise their profile and lobby outside bodies including the government and EU.
  • Micros and SMEs must introduce mechanisms to improve networking and working relationships with other key organisations such as colleges, professional bodies and qualification awarding organisations.

A recent survey showed that the majority of micro/small enter

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