Small businesses are investing in creative skills in a bid to create growth, according to a study by Clydesdale and Yorkshire Banks.
In a survey of business leaders at more than 750 UK-based small and medium-sized enterprises (SMEs), around half of respondents (52 per cent), say having the right people and skills is the single most important factor for a business to be innovative.
This is compared to fewer than one in four (24 per cent) who believe having the right idea is most important.
As a result, the research suggests SMEs have prioritised staff training and development over other investment opportunities in the past year, and intend to do so again in the next 12 months.
New equipment, technology and investment in premises, are also key, according to the survey.
The belief that people come first is underlined when asked whether the UK economy has the right skills, or the right environment, to foster creativity and innovation. More than half (54 per cent) of respondents feel the UK economy fosters innovation but this increases to two thirds (66 per cent) who believe the economy has the right creative skills for growth.
However, it appears businesses could be selling themselves short when it comes to accessing the support available for innovation or research and development (R&D) activities.
According to the survey, less than one in three (31 per cent) businesses has ever accessed government incentives such as R&D tax credits or Patent Box, and only a third (34 per cent) plans to do so in the future.
The approach to financing innovation and creativity is also mixed across the UK, with the same number of businesses not having a dedicated budget for research and development (42 per cent), as those that do (42 per cent).
When looking at different industries, two thirds of manufacturing businesses, and 58 per cent of IT businesses, put money aside specifically for research and development.
Paul Shephard, director of business and private banking at Clydesdale and Yorkshire Banks, says that businesses need to consider creativity, in whatever form that takes, when planning for growth.
‘Innovation comes in many forms, not just cutting-edge technology or design. For many service-led industries this could mean being innovative and creative to meet customer demands, or approaching the market in a different way to competitors,’ he says.
‘What is important is that businesses continually review their performance and how they serve customers to ensure they are on top of their game.’
Shephard adds that in today’s increasingly digital economy, where customer demands are higher than ever before, innovation is even more crucial.
‘We’ve seen the make-up of our economy move from one of heavy industry to one of knowledge. This means growing businesses are often rich with intellectual property and intangible assets, rather than premises, plant or machinery.’
Further reading on innovation
Survey: Innovation not a priority for small business owners
The UK’s small and medium-sized business owners are struggling to innovate due to competing business priorities and a lack of appropriately-skilled employees, research finds.
More than a third (34 per cent) of small business owners in the UK have neglected the development of new business ideas, primarily due to lack of time, despite small business owners working over 40 hours a week, according to a study by Sage.
One in five UK entrepreneurs attribute their long hours to the lack of appropriately-skilled employees, citing this as a reason why they struggle to delegate work.
The development of new ideas is ranked as the most common area of neglect, with customer contact, staff development and bill payment also on the priority list. In a small number of countries, including the UK and Germany, entrepreneurs have said they would rather spend time on innovation than on general office administration.
The survey highlights some of the major challenges facing the world’s small business owners as they strive to power the global economy.
But innovation isn’t the only thing to suffer as a result of time-poor entrepreneurs. One in three UK small business owners say that time pressures result in losing customers and clients. In addition, small business owners are sacrificing valuable down-time with 32 per cent having taken fewer than five days of holiday in the last year.
However, small business owners are open to solutions to help them devote more time to innovation. As well as improving skills amongst employees, better administrative processes and technology are highlighted by nearly 40 per cent of UK respondents as useful in releasing more time.
Stephen Kelly, CEO of Sage says, ‘Small businesses around the world are the true heroes of the global economy and we need to support them in helping them find the time to develop and grow.
‘When so many businesses create a dream business from a great idea, it’s heartbreaking to see business owners forced to let that innovation fall by the wayside. We know how hard they work, and we want to help entrepreneurs carve out some time to keep their innovative spark alive.’