National Living Wage

From April, workers aged over 25 will be entitled to a National Living Wage (NLW) of at least &7.20 an hour, from 2020, the NLW will rise to &9 an hour. What does that mean for SMEs? Recent analysis from the Resolution Foundation think-tank found that:

- Around one in five small business employees will receive a pay rise when the NLW is introduced in April

- This will increase to three out of 10 workers in 2020

- Total wage bills will rise by 0.3% in April

Recent surveys have found that nearly four-fifths of SMEs believe that the NLW will have a negative impact on their ability to hire staff and grow their business, while only one in 20 think it will have a positive impact on their business.

You must ensure you have the appropriate strategies in place to cope with the change, considering the consequences for these actions also. For example, you could take on younger staff or apprentices to save money. However these recruits may not have the skills required.

Skills shortages
Having a workforce with the right skills is essential for business growth. One recent survey discovered that a third of SMEs do not believe their workforce has the skills required to meet their business needs, while another study found that more than a quarter of SME manufacturing and engineering firms believe the lack of skilled potential recruits is a barrier that prevents them from growing.

A shortage of skills is a particular challenge for medium-sized companies, with 44% of firms with between 50 and 249 workers citing it as a problem. Nearly nine out of ten (87%) businesses of this size say they plan to increase the skills of their workforce over the next two to three years.

You may want to consider:

- Investing in staff training

- Setting up apprenticeship programmes

- Widening the pool of potential talent (e.g. recruiting more workers from overseas)

- Outsourcing parts of their business where there is a skills gap

Each approach brings unique challenges, from the cost involved in training staff, to the need for robust supply chain management when outsourcing.

Britain’s uncertain future in the European Union

Various polls have attempted to gauge SME opinion on whether Britain exiting the EU – often referred to as ‘Brexit’ – would be a good or a bad thing. A poll by the Federation of Small Businesses found that SMEs that export to Europe are far more likely to support the UK’s continued membership of the EU.

Cyber risk

While cyber attacks on major corporations such as TalkTalk and Wetherspoons may generate more media interest, SMEs are increasingly being targeted by cyber criminals too.

Over the past year, 74% of small UK businesses have experienced a cyber breach. It is estimated cybercrime costs British businesses &34 billion a year and can also have a devastating effect on a company’s reputation.

More than 1,000 UK businesses have adopted Cyber Essentials, a government scheme to protect firms against some of the most common online threats, including viruses, malware and hacking.

Businesses can also build a human line of defence against cyber attack – for example by educating staff on phishing scams and encouraging employees to report these types of scams to their company’s IT department.

If you have concerns about your business over the next coming year, see how Goodrich Insurance could help by contacting us today!