It’s second century A.D., you’re a gladiator entering a great stone amphitheatre preparing for battle. Citizens of the republic watch with excitement and anticipation, taking bets on who will win and who will lose. The chance for eternal fame drives you forward, despite the potential threat of failure.
Fast-forward many centuries later and we’re still facing our very own battles. Although perhaps not quite as deadly or spectacular, a battle – of some sort – and potential to fail is something all British start-ups face, especially within their first five years of operation. Instead of a Roman audience, start-ups have investors and staff watching their every move and are stalked by potentially fatal business challenges.
In fact, research reveals companies are forming at an unprecedented rate with a reported 452,265 start-ups having already set up shop for the first time in 2017. This makes Britain the third most popular location to start a business in the world. However, for these start-ups the odds are against them as sadly only 10 per cent of them will make it to their fifth birthday.
The barriers to becoming a successful SME
The failure to appreciate the necessity of long-term planning is one of the main reasons why a huge number of British start-ups fail to become successful SMEs. Start-ups can fall into the trap of prioritising their desire to create ground-breaking innovation and challenge the status quo, at the expense of streamlined processes which pave the way for growth. Similar to how a gladiator might play up to the crowd, gaining their cheers of admiration, but the fight might be over before it even begins if you don’t pay attention to the threat that shares your stage.
The essential role that HR plays in a company’s success is now being recognised and quantified. Even new technology is being designed to track company culture and morale as a way of predicting its future success. Ensuring that the right skills and the right people are in the right place at the right time is key to ensuring success. This means that the way small businesses recruit and retain talent is fast becoming a key differentiator and success factor.
Call for HR support
The recent news that the CIPD is calling for a £13 million investment from the government into HR support for small businesses has reiterated the paramount importance of HR and has highlighted where SMEs are lacking focus.
It is unlikely many start-ups hire a dedicated HR employee during the early years, simply because, at this point, other roles appear to be of greater priority. For instance, recent research shows that business development and client satisfaction are ranked as the top priorities for small business owners. As such, it is no surprise that HR is being lumped into the ‘laborious but necessary’ business admin section and placed into the hands of busy senior staff.
Research conducted by breatheHR shines a light on this phenomena and revealed that CEOs of UK SMEs spend a fifth of the working week on the administration of HR activity.
HR-related tasks, including holiday approvals, logging sickness absences and approving expense requests, therefore take up an average of eight precious hours of a CEOs working week.
This becomes even more shocking when it is compared to the weekly average of seven hours which office or operations managers contribute to HR tasks, who might have more capacity to spend on admin. Even finance managers are spending just over three hours a week on HR-related bureaucracy and administration.
A drain on finances
This situation is simultaneously costing businesses a total of £18,700 each year, while also being an absolute misuse of individuals’ skillsets. Of course, part of the CEO’s role does revolve around the growth and development of both the design of the company and its culture, which often requires necessary admin, such as the recruitment of new talent. However, CEOs’ HR efforts are better focused on ensuring the person they are interviewing would make the right cultural fit rather than updating employee records.
As an SME business owner, I’ve quickly come to realise that it’s impossible to do it all. But an essential ingredient of creating a successful business is looking after your people who are driving the company forward, and to do this from the very beginning, not as an afterthought. But to do this you need time. And time is one thing I’m sure many business owners feel they never have enough of.
Just as a gladiator arms himself with a sword and shield to aid his battle, small businesses need to use the tools which are available to help them. There are many affordable options, such as using technology, to do some of the admin-heavy, time consuming work. Many tools on the market can automate tasks in a fraction of a second, letting you get back to the things that really matter: the fight for survival.
Jonathan Richards is CEO and founder of breatheHR.