Innovation: the key to growth for British SMEs

Date: 01-12-2015

Tagged as: ArticleGameplanInnovationGrowth

 

Innovation is vital to business growth according to the results of a new survey of SMEs from Lloyds Bank. But, although 91% of firms are keen to increase innovation, almost two-thirds encounter barriers. So what’s holding back the revolution and how can businesses get ahead?

Despite the UK rising from 10th to 2nd place in the Global Innovation Index between 2011 and 20151, there seems to be a disconnect between innovation research and on-the-ground implementation. And, although our survey clearly indicates that SMEs are hungry for innovation and 85% state that they are aware of the benefits, something is holding them back when it comes to adopting it within their business.

What are the benefits of innovation?

Lloyds Bank's survey results show that innovation can boost profits, with the average SME generating £1.74 in additional sales for every £1 invested in R&D. Beyond that, 43% of SMEs surveyed state that innovation helps them win new customers and 37% indicated that it helps them attract new talent.

This is backed up by the Department for Business, Innovation and Skills' Innovation Report, “Innovation is the engine of economic growth and improved living standards”.2 What that means for businesses, meanwhile, is also expressed: “firms that persistently invest in R&D have higher productivity, better value-added per employee, and more exports”.3

The SME imperative for innovation infographic

What barriers are businesses facing?

46% of respondents also stated that availability of new talent is in itself a barrier to innovation, creating something of a conundrum, and encouraging a drive to recruit millennials to up-skill their 'next generation' talent pool.4

So what else is holding SMEs back? For 54% available time is a major barrier to innovation, and investment is also recognised by 44% of respondents as vital to the development of new ideas.

But support is available says Gareth Oakley, Managing Director of SME Banking at Lloyds Bank Commercial Banking. “We're seeing a growing determination amongst Britain's small and medium sized firms to innovate in order to drive competitiveness and secure their long-term success,” he says. “However, the scale of the challenge these businesses face is equally clear from our survey. Unless we provide access to the talent necessary to deliver that innovation, we run the risk of missing an enormous economic opportunity.

“That requires a concerted and collaborative effort on the part of the UK's innovation eco-system, with skills and funding being the killer ingredients. As a major supporter of small and medium-sized firms, we're determined to do our part.”

Overcoming obstacles infographic

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