Successful and growing small businesses are essential to the UK’s economic success. Only when business owners and their staff are equipped with the right skills can their enterprise grow. Therefore, meeting the skills needs of small businesses is a key part of having a productive and growing economy. It is crucial that we evaluate how we can support individuals to develop the skills they require for successful careers, and ones that businesses require now and in the future.

The skills of business owners and their staff are central to running and growing a successful business. Aside from the more tangible benefits of learning new skills, such as the development of new products or technologies, training improves business competitiveness, efficiency and longer-term effectiveness. Essentially, keeping our skills up to date and learning new ones is an indispensable part of growing a business.

Yet even prior to the pandemic and Brexit, firms were facing challenges in recruiting the talented people they need to ensure economic growth. As the UK emerges from the Covid-19 pandemic, small businesses are experiencing both labour and skills shortages. There are simply not enough people, and enough suitably skilled people, to meet business demand.

A forward-looking, cross-departmental labour market strategy is a pre-requisite to solving the difficulties we have with skills mismatches in the labour market. We must also ensure all people have the basic skills they require to move onto higher level qualifications and developing more specialist skills sets. Ensuring that vocational training, such as apprenticeships and T Levels, are highly-regarded routes and are meeting business needs is also paramount.

Education and training can no longer be just for the first 20 or so years of life. With the country needing to respond to climate change, undergoing shifts in demographics, and with the ongoing automation and digitisation of work, lifelong learning must be more widely adopted. Effective support should be readily available to allow small business employers to support their staff to learn new and pertinent skills.

Leadership and management skills are widely accepted as being crucial to adopting innovation and productive businesses. As well as the skills required to effectively run a business, we need to also think whether we are delivering the skills to those who want to start an enterprise. The current young generation, “generation side-hustle”, have a huge amount of potential. Ensuring that they have the know-how to successfully turn their ideas into thriving businesses is an exciting prospect for them, and for the nation’s economic ambitions.

This report provides policymakers with information and suggestions to address these complex problems. FSB is keen to continue to work with national and local governments and other stakeholders with the ambition of creating an education and skills system that supports a high-growth and productive economy.