Small businesses are sourcing affordable training alternatives to sidestep steep staff development costs, new research from the Forum of Private Business has revealed.

According to the findings of the Forum’s latest training and skills member panel survey, more than one in five firms (22%) use guides and handbooks, while other popular alternatives include supplier training (48%) public sector training provided by bodies such as colleges or local authorities (41%), services from trusted advisers such as accountants (38%), personal coaching and mentoring (34%), online training services (28%), ‘DIY’ training including industry tips (24%) and analysing competitors (14%). Just 3% use self-help videos.

While 32% of panellists believe the overall training and skills environment has improved recently, compared to the 19% who think it has deteriorated, costs are seen as the biggest barrier to providing training for employees, with 61% of panellists reporting this.

In all, 40% said the availability of training is a barrier, 28% indicated quality of courses as an issue and 22% reported that time needed for training is an impediment.

The Forum’s chief executive Phil Orford said: “For the sake of small businesses and the economy, it is important that small businesses are able to access the right training for their staff at the right price. Unfortunately, while there have been some improvements recently, this is often not the case at present.

“But entrepreneurs are finding ways to provide the skills training their staff need that are more affordable than traditional routes such as expensive courses. This is particularly relevant given the training and guidance required in order to negotiate the minefield of red tape, which is why small businesses value handbooks such as our employment and health and safety guides.”

The Forum’s research suggests time and money spent on red tape training is hindering coaching in key skills and other areas of staff development, affecting recruitment and, subsequently, economic growth.

A total of 64% of respondents include regulatory compliance as part of their training budget, compared to 45% who prioritise replacing specific skills lost when individuals leave their businesses, 44% who focus on continuing personal development and professional skills, and 41% who budget for efficiency training to improve productivity.

In addition, 31% of Forum members surveyed ensure workers receive skills training focused on growing their businesses and 16% provide strategic training such as management skills. 

Just 3% use external third parties such as freelancers to source skills and deliver services previously retained in-house, including marketing and administration. Further, 11% of respondents provide no training at all.

A total of 65% of panellists have subsequently not recruited in the past year, even though some had considered it, compared to 35% who have taken on staff.

In all, 58% believe their training focus is ‘not ideal’, citing time and costs as the main reasons, compared to 40% who think it is – with improved business performance the main benefit.

Orford pointed to earlier Forum research into the cost of complying with red tape, carried out in July 2011, showing that small firms are spending more time and money on complying with regulations – £16.8bn per year to be exact – despite the government’s legislation-busting initiatives.

A total of 84% of Forum members reported an increase in time spent complying with legislation since 2009, when the not-for-profit organisation’s previous ‘cost of compliance’ Referendum survey took place.

Further, 67% of respondents said they were being forced to spend more money on external consultants to help them avoid legal pitfalls.

Despite tax-related regulation being deemed the most costly area of red tape, leaving smaller employers with a bill of £5.1bn per year, employment law came second at £4.2bn, followed by health and safety law at £3.8bn.

Orford added: “Employees are hired because their skills and experiences are essential in driving firms forward, and training is an important part of this process, but despite sourcing low-cost alternatives many business owners are being forced to spend valuable training time and money on ensuring they comply with regulations, or are simply not recruiting at all.

“We need government measures designed to free firms from unnecessary regulations to start working quickly – the situation does not appear to have improved for many small businesses and the prospects for economic growth are being threatened.”

Topics