The success of small and medium-sized businesses is vital to the UK’s economic success, and our ability to compete on the international stage. They make up 99 per cent of companies in the UK, yet they face a highly challenging environment in which to succeed.
Even with the best will in the world, estimates show that at least half of small and medium-sized businesses don’t survive their first five years.
The main barriers to success are not internal factors decided by the companies themselves, but external ones, such as access to funding and public procurement.
Clearly, creating a more fertile climate for innovation would reap significant rewards for the UK as a whole. Yet, as a proportion of GDP, Britain has the lowest levels of government funding for research and development of all G7 countries.
Perhaps it’s not so surprising then that the UK has previously come under fire for not being as efficient as others in exploiting our ideas and turning them into marketable products, bridging the so-called “Valley of Death”.
Third party and public support is vital for helping early stage businesses to ensure long-term success. The healthcare industry is a prime example of this. Healthcare is a very heavily regulated industry; and gaining approval for products or services can be considerably more difficult and costly in healthcare than in other environments.
As well as lacking funds, UK enterprises are also labouring under a well-publicised engineering skills gap and it is increasingly difficult for startups to compete in a crowded recruitment market.
Fast-growing small businesses often have to fill multiple roles at the same time – from technical roles to business development and marketing – which can be an enormous challenge on tight resources. Training and “upskilling” of existing staff is one solution, but requires investment that many startups aren’t able to prioritise.
I strongly feel we need to see far more invaluable support in the form of grant schemes like the Royal Academy of Engineering's Pathway to Growth scheme being offered to UK small businesses to help them through the growing pains of an early-stage business.
The rewards for investing in UK innovation are clear. The Royal Academy of Engineering’s recent Investing in Innovation report highlights, for example, that for every £1 the government invests via InnovateUK the UK economy receives £6 in gross value added.
The UK has an exceptional research base – we undoubtedly have the ideas and the know-how – but no one can turn an idea into a business alone. Both financial and knowledge-based support is extremely important in fostering innovation and ensuring that ideas are developed and exploited here in the UK where we can benefit from them.
Without such support, Britain will continue to lose out to countries that invest far more heavily in their early-stage innovations.