Nine in ten London SMEs are struggling with productivity

Ninety-three per cent of SMEs in London are struggling with productivity. This is in comparison to just 78 per cent across Yorkshire, the South West and East England.

London is one of the top three areas in the country with productivity issues in its small to medium sized businesses, according to new research from Opus Energy. Coming in only behind the West Midlands and North East, a shocking 93 per cent of firms confessed it is a problem. Compared to 78 per cent across Yorkshire, the South West and East England, the capital city is lagging.

As a result, SMEs in London are being forced to implement a wave of changes to help compete with the rest of the country, with employee wellbeing measures such as flexible working being the most popular tactic for nearly half (46 per cent). More than a third (38 per cent) are tackling the problem by paying employees above the average wage, while a similar number (36 per cent) are offering incentives and perks to raise team morale.

However, only a quarter (27 per cent) of those that are trying to invest in a solution have set up their company near other likeminded businesses, in order to capitalise on a culture of innovation. This is despite the fact that nearly three quarters (72 per cent) believe that working with businesses of this ilk would provide some much-needed help from the perspective of improving productivity, commercial success and competitive advantage.

When asked how they chose the location of their business, half (50 per cent) of smaller businesses in London said that it was because it was where they lived, a quarter (26 per cent) said that it was to capitalise on nearby talent, and just one in ten (11 per cent) said that it was to be part of a business cluster.

Nikki Flanders, Opus Energy chief operations officer, comments, ‘Considering that 99 per cent of all private sector UK businesses are SMEs, to hear that the vast majority of those in our capital city are struggling with productivity is a serious concern. While it’s great to see SMEs introducing perks and wellbeing benefits for their employees in order to improve productivity, it may also be worth researching the possibilities of joining a business cluster, in order to benefit from the proximity of other businesses. It’s clear that there is an appetite in London for greater collaboration with other businesses, however, only a quarter are taking steps to make these ambitions a reality.’

When asked about the struggles that they encountered when setting up their business, 42 per cent of small business owners in London found that cost was their biggest challenge. Twenty-nine per cent cited finding employees and a quarter said understanding the legislation around setting up a business.

Nikki Flanders continues, ‘For any small business, cost and convenience will, of course, be major factors in determining where to start out. However, rethinking this approach might open up many more options for small business owners. At Opus Energy, we have found that opening our offices in regional hotspots or clusters has helped us recruit more quickly and enabled us to hit the ground running. As Brexit negotiations enter their second phase and the UK gears for a period of significant change, it’s vital that SME confidence rises and that we have a strong business community in our capital city, and indeed across the rest of the UK.’

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