Small businesses are struggling to raise salaries and as a result, are finding it difficult to employ the talent they need. How can owners meet the costs? Alternative finance can help.

Prolonged economic malaise is a key factor behind the widening skills gap and small businesses are finding it increasingly difficult to fill key positions. With only comparatively limited resources at their disposal, small firms are unable to compete for talent with larger organisations. News that actual pay growth is slowing is indicative of this struggle.

Not having the necessary skills is a significant problem for small businesses; it is one that can affect their bottom lines. A study by Robert Half UK estimates that the skills gap could impact revenue by £145,000 in 2020 and by over twice as much by 2025.

Furthermore, not only do small business owner face pressure with regard to employing top talent, they could also face a hike in costs at the other end of the employment scale, with the Tory party proposing a significant increase in the minimum wage rate.

Should the government follow through on its election promise, the UK will have one of the highest minimum wage rates in the world and four million low-paid workers will see an increase in pay. While this is good news for low-paid workers, it is a different story for the business sector, in particular small firms. Notably, there has been considerable opposition to the plan from the business sector.

So, with so many other costs to manage, how can small businesses hire and retain the talent they need to grow and succeed? How can they afford the investment and capital outlay that such a strategy involves?

Alternative finance can help.

In the wake of extended caution from traditional lenders, the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding are redrawing the small business funding landscape. These facilities, which offer a more personalised approach to lending, are helping small businesses grow. They are providing them with access to capital, on an affordable and flexible basis, to help manage cash flow and for critical investment, including with regard to hiring and retaining talent.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to invest in new equipment.

Market development, with a particular nod to the impact of Brexit, remains difficult to predict. However, one thing is certain, the UK needs to see small business growth and to achieve this, small firms need to be able to employ the right talent. And this takes investment. This is why small business owners should be aware of the all funding options, including alternative finance.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.