The contribution of the North West’s mid-size businesses (MSBs), with an annual turnover of £10m to £149million, is at risk from a lack of clear identity, shortage of skills and talent, technology challenges and Brexit uncertainty, a new benchmark report has revealed.
The findings, from the largest, national study of UK mid-size business directors, have been produced by North West-based MSB Leaders, in conjunction with Salford Business School and sponsored by national law firm Shoosmiths.
MSB Leaders Chair, and co-author of the report, Sarah McKenna explained, “We know MSBs make a disproportionate contribution – they make up only 1.5% of businesses yet contribute 1/3 of national turnover and a staggering 22% of tax receipts”, she said.
“Our ground breaking research reveals MSBs’ lack of clear identity, combined with Brexit uncertainty, a skills and talent shortage and technology challenges have significantly impacted their growth ambition – leading to cautious innovation, strategies to consolidate and unrealised productivity gains.
“These findings put at risk MSBs contribution to the UK economy their potential contribution to our national industrial strategy initiatives and the country’s global competitiveness.
“With 75% of MSBs located outside of London, this impact will be felt most by regional communities, like the North who rely heavily on MSBs and make up 19.3% of all MSBs nationally.
“However this study, for the first time, provides an evidence-based classification for MSBs, including those in the North West, giving them a clear identity, as well as a framework for government and industry to tailor policy, regulation, services and resources.
Results also identified MSB unique strengths and challenges that must be addressed in order to return MSB confidence, restore their capability and protect their current and potential contributions.
These included that they saw Brexit as a higher board priority (43.8%) compared to small (28.8%) and large business (29.2%), this is no surprise with more than half of MSBs exporting to the EU.
This was particularly important to the North West economy as exports play a vital role with nearly three-quarters (72%) of MSBs selling their goods abroad. The North also has a higher percentage of exporters doing business with the EU (91%) than any other region.
Strategy and planning were high on the national board agenda (68.5%) and domestic expansion a priority for more than 40% MSBs – possibly as a response to Brexit.
Skills and talent shortage is the number one past, present and future issue for MSBs and they prioritise it more highly than small business or large enterprise. This was particularly prevalent in the North West with 31.6% of MSBs seeing this as the most significant current challenge, compared to 21.9% nationally and in stark contrast to London MSBs at 16.7% when you consider this percentage in real terms.
Professor David Spicer, Dean of Salford University Business School said: “Fuelling MSBs makes both economic and social sense. With more relevant and tailored support MSBs can play an even greater role in realizing our national economic industrial ambitions and reducing prosperity gaps felt regionally and nationally.
“The importance of providing MSBs with a classification and an identification of their challenges and opportunities – should not be underestimated in terms of the value it provides them in searching for relevant and effective solutions and support.
“Similarly to the Greater Manchester Independent Review (which our results strongly support), our report also acts as a guide for Government, industry and MSB leaders, with 47 explicit recommendations as to how issues could be addressed but specifically focussed on MSBs.”
Simon Boss, CEO at national law firm Shoosmiths, said: “MSBs make a significant contribution to the UK economy and will continue to be a crucial backbone for the country post-Brexit. That’s why it is important to understand what leaders of MSBs need and ensure relevant services and valuable support is in place. Many of our clients are MSBs, which is why we chose to sponsor this research, not only to improve our own services and support, but as a greater contribution to industry and the many regional economies within which we operate.
“We are fully invested in the findings of this research and plan to further support MSBs with a new information-hub. I invite other professional service providers to join us and provide the necessary recognition and support to help MSBs meet their strategic objectives.”
Wayne Nash, Head of Office at Shoosmiths Manchester, added: “It’s clear from this study that we need to unleash the potential of our MSBs – particularly in the North West. These businesses are a vital cog in our regional economy – dynamic, resilient and job and wealth creators.
“As we enter a critical phase in our history, there’s never been a more important time to support MSBs and help them fulfil their strategic goals and priorities.”
The full report can be found here