(27 May 2009)

The UK's entrepreneurs are maintaining their workforces and avoiding redundancies during the downturn according to the latest Grant Thornton Entrepreneurial Insight survey. The survey of over 500 UK owner-managers of independent businesses indicates that reducing headcount is the single biggest issue for just 1.6% of those surveyed. The survey did reveal, however, that 63.5% of entrepreneurial businesses are looking at ways to cut staffing costs.

More than half of the entrepreneurs surveyed expect to see an upturn in the economy within the next two years. Even in the current climate, very few are actually making people redundant and over the next 12 months 51.5% expect the size of their workforce to stay the same.

Alysoun Stewart, Head of Entrepreneurial Advisory at Grant Thornton says, "Entrepreneurial businesses tend to be lean operations, so each employee is vital to the running of the business. This segment of the economy has not been responsible for the major job losses we have been seeing as it is holding tight, believing in the value of its people and looking to a brighter future in less than two years’ time. It would make bad business sense to cut jobs now only to have to recruit again in the near future."

The survey revealed that 63.5% of entrepreneurial businesses are looking at ways to cut staffing costs.

"Due to their size and structure, entrepreneurial businesses are agile and can easily adopt creative working methods to cut costs. We are seeing a growing number of businesses implementing methods such as eliminating overtime and redeployment within other areas of the business. Employees are the lifeblood of a company and entrepreneurs know that they will need to keep hold of their talent for when the market begins to recover."

Entrepreneurs simply do not see their employees as numbers; nearly 54% say the greatest single asset their company has is their people. Many entrepreneurs build up their workforces themselves and have personal relationships with everyone in their company. Respondents feel overwhelmingly responsible for their employees’ futures with 96.8% feeling responsible or very responsible and in turn 98.6% considered their employees to be loyal or very loyal to them.

Stewart continues, "Entrepreneurs see the value they have in their companies as being embodied in their people and if the people go, then the value goes too. Many entrepreneurs see redundancies as a betrayal of their employees' trust. In addition to the economic investment their people represent, there is also a personal investment in the workforce which means they would rather look to other areas first when it comes to cutting costs."

The survey also revealed that there is still a desire to invest in training (52.4%) to make the business a great place to work (92.6%) and to invest in technologies for the future (53.6%). Three quarters (75.7%) are expecting the recruitment climate to get easier, so companies are keeping people on and watching the market for talent, even if they are not directly recruiting now in order to be ready for the future when it comes.

"In true entrepreneurial style we are seeing businesses gritting their teeth and doing everything possible to ride out the downturn in a way that ensures they emerge fit for purpose," concludes Stewart.