Can SMEs achieve the Living Wage aspiration….?
In the current market place SMEs are generally pulled from pillar to post with commitments from the financial to the ethical, the environmental to the commercial.
Most SMEs survive and thrive by spinning all of these plates particularly well and ensuring all aspects of their business work in harmony and towards a common goal. The most recent concept being brokered by the business community is that of employing workers on a living wage.
Following a recent poll 64% of business owners questioned backed the idea but saw it as an aspirational goal and usually not one that is immediately achievable. Anyone successful in business knows you are only as strong as your weakest link so when a business has great employees it is hugely important that they feel valued and justly rewarded. It is in the interest of the business to try and retain them and inspire loyalty, being an employer who pays the accepted living wage is just one way to do this.
Funding in business is a balancing act taking loans or funding that, in the long run, will benefit the business and show a return on the initial cost usually through investment in growth and sustainability. SMEs have more funding options than ever to try and achieve this balance, with funding enabling businesses to attain the living wage accolade amongst their other business aspirations.
Below is a list of what is seen as the top 5 funding options for SMEs in the UK.
Traditional Bank Loans – Generally less flexible than some other forms of lending but still a viable option for most in the current climate.
Asset Based Finance and Invoice Finance – The fastest growing form of funding with SMEs, generally it is flexible, reliable and sustainable. With short term contracts now being offered this is an option that many SMEs are using as an interim growth tool.
Friends and family – Quite often a quick, low hassle option in comparison to some other forms of lending however it should be considered that having a more diverse shareholder base can often lead to strained relations should the business not succeed as planned.
Crowd funding – Crowd or “peer to peer” funding, where groups of people pool their finances together to fund a business venture, is becoming increasingly popular but relies on a good network of business links to work together.
Private equity – This is usually available to businesses in a very strong financial position with good potential for growth. This is generally a more expensive option as an investor would usually look for board representation and sometimes a majority equity position.
It seems that the responsibility of employers towards their staff is once again in the spotlight; businesses that succeed in the future will take heed of societies demand for social responsibility and for employers to inspire aspirational values and support employees in being financially independent.
In reply to the initial question “Can SMEs achieve the Living Wage aspiration….?” I believe in time the answer will be “We need to in order to succeed”. Employee expectations are higher than ever and in the extremely competitive market place it is more important than ever those businesses attract the right employees for the job. It is generally accepted (though not proven) that if people feel they are remunerated fairly and paid a living rather than a minimum wage for the work they do they will work harder and be more reliable, so for SMEs to grow their business, support their employees in this way and by extension wider society, more may soon look for alternative business funding options such as those detailed above.