• London
• SMEs
• Transformation

Written by Sabby Gill, Managing Director UK and Ireland, Sage

In February I had the pleasure of delivering a keynote speech at the #DigiLeaders SME Conference in Manchester. The aim of which was to support digital transformation and inspire innovation.

A bold but ambitious aim and something we desperately need as a country if we are to project a positive vision for a United Kingdom that is smart, open and digital. Something that everyone I spoke to at the event agreed is needed too.

The focus of my speech was around productivity. Sage commissioned a report (Sage and Nesta ‘The State of Small Business’ 2017), which found that the most productive small business region in the UK is 26 x more productive than the least. Not good enough and it certainly doesn’t have to be this way.

What’s Sage’s role?

As one of only two FTSE 100 tech companies we have a responsibility to our customers that goes beyond the technology we develop. We started as a small business in the North 35 years ago by three hugely ambitious and determined students that wanted to do things differently in the world of accounting. They wanted to help businesses do things better, faster and more efficiently.

It is upon this attitude that we built the foundations to our business and we understand implicitly the determination it takes to overcome the common hurdles that growing businesses face.

What kept us awake then, is what keeps business owners that were at the SME conference awake at night – how to be more productive, more agile, how to thrive.

We know that small and medium businesses (SMBs) are the engine of our economy.  73% of new jobs created since the 2008 recession were within SMBs.  The people I met at the conference are part of the cohort of companies that have been critical in achieving record levels of employment in the UK, including creating opportunities for thousands to move from welfare dependency into work.

But the focus must now shift from simply SMB creation to also lifting productivity. We need that engine firing on all cylinders and the wheels well-oiled in order to thrive (especially in a post Brexit UK).

The productivity lottery

To champion our SME customers and help the productivity engine run at full throttle, Sage created a comprehensive, postcode by postcode snapshot of the current state of SMBs in the UK.  The report called State of Small Biz shows how SMEs are performing certain areas. Unsurprisingly, the Thames Valley area is one of the most successful and supportive of small businesses in the UK. At the conference, I shared a quick look at the landscape in the North West:

• There are currently 521,065 SMEs in the North West, accounting for 10% of total SMEs in the UK
• The most productive local authority in the region is Fylde, with each worker worth on average £603,000 of SME company turnover
• Manchester appears in the bottom five regions in the UK for productivity.  The average worker in an SME is worth around £120,000 of turnover.
• To provide some wider context, in the most productive local authority in the UK (City of London), each worker at a Small & Medium Business is worth £1.45 million in company turnover

The businesses that attended my keynote were largely shocked at the disparity between the North West and London but this is reflective of the inequality throughout the UK and something we desperately need to tackle.

How can we aid better productivity?

For us, the key is to understand why productivity varies so widely across the UK and how we can solve this productivity puzzle.

Part of it is due to a lack of technology adoption in some areas; as yourselves ‘how is technology integrated into your business’? Great tech can streamline processes, reduce administration and help to source new revenue streams but the productivity issues is more than this.

We can only solve it by understanding the data and creating local solutions and as one business said after my presentation “collaboration is key”; this means businesses and local authorities joining forces and working together. It was great to hear that two local organisations in Manchester (@BizGrowthHub and @bethebusiness) aim to do just this and deliver a mentoring programme to specifically address productivity gaps.

At Sage, we have started this process in our hometown in the North East, where we have brought together leaders from the local authorities, CBI, FSB and local businesses to help create a local SMB growth plan focused on the Nesta report’s recommendations.

This is what needs to be done in every region within the UK. What we need is for local government to place productivity higher on their agendas and create practical tools and training that help increase SMBs’ productivity – whether that be an investment in digital skills, unblocking barriers to exporting or something as simple as making broadband more accessible.

So, we need to keep communication lines open; we need to keep the government informed about the challenges faced by our small businesses daily that prevent greater productivity and growth. And, we need to ensure the government stays informed about how much small business contributes to the success of this country.

Next steps?

So my ask of people reading this blog – and it was the same ask of the conference attendees – is that you look at our stateofsmallbiz.com report … review at your regional results and get in touch with your local MP or authority to highlight the need for government support.

Our next Nesta report will be out late Spring so keep an eye out for that too.

Follow me on Twitter: @sabbygill7

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