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The Joy of Enterprise Management Incentives
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Fight the top 3 small business challenges with share schemes

Fight the top 3 small business challenges with share schemes

Table of Contents

Share schemes! You might equate them with the cut and thrust of the tech world but did you know that they are becoming more common across all industries? 

In fact, the latest figures from the Government show that share scheme adoption has risen by 80% over the last ten years.

So why are these schemes becoming so popular and what can they do for your small business?

Statistics you can’t ignore

If I told you that over 90% of the people that we’d interviewed agreed that share schemes have done good things for their enterprises, that’d probably get your interest right?

Because that’s precisely what our research has uncovered

Share schemes are the secret sauce underpinning many-a-business success and this is well understood by leaders of big multinationals. What’s less known is how advantageous share schemes can be to micro to medium businesses.

So let’s look at the most common challenges faced by small businesses and discover how share schemes can help overcome them.

1. The Great Resignation

You’ve probably heard about the worker shortage sweeping the UK. Unfortunately, it’s not predicted to get any better soon. The Confederation of British Industries warned just last week that acute shortages are going to spread and last as long as two years.

To understand how share schemes can help you buck the trend, we first need to look at why these shortages are occurring.  

The first reason is that there are literally less workers.

Both the hospitality and the retail sector (two of the most common types of small business) are two of the most reliant on European workers. Post-Brexit, we are naturally seeing fewer workers head for the UK. 

This situation has become more pronounced given the effects of the pandemic. Many people have either been forced by their governments to stay at home, or they’ve decided to remain closer to their families.

So competition has become more fierce for those available to work, and given the knock-on financial effects of Covid, many smaller companies just don’t have spare cash to offer competitive salaries.

If that’s the boat you’re in, you’ll know how tough it is to capture the attention of job seekers.

The good news is that you don’t need deeper pockets to offer an attractive package.

In fact, our research with YouGov earlier this year showed us that when choosing one job over another with identical pay, flexibility would tip the scales for a whopping 66% of UK workers.

However, if you can’t offer that, one in three said that a share scheme would tip the balance for them.

If you set up your scheme with Vestd, you’ll be able to quickly add a transformative and tax-efficient benefit to your compensation package, enabling you to attract more staff.

But don’t just take our word for it.

Earlier this year, we surveyed our customers and discovered that 92.9% agreed that their scheme had helped them to attract talent, and what’s even better is that 95% confirmed that their scheme had enabled them to retain their staff too. 

Amazing.

2. Client dependence

If you’ve just started out (or if you’ve settled into bad habits), you’ll be one of the many, many small business owners that are dependent on just one client or a small band of loyal customers. 

Obviously, carrying on down this path leaves you seriously vulnerable to wipe-out should those loyal feet walk elsewhere, so you need to find a way to drum up more business. But how to do that when you are so busy running the business?

The key here is to turn other people into advocates on your behalf. 

But how to do that?

Again, a big part of the answer is share schemes. By giving people a slice of the pie, you’ll be harnessing the power of a psychological phenomenon known as the ‘ownership effect’. 

The Ownership Effect can do wonders for commercial activities. 

Evidence shows that when an employee owns even a fraction of equity in a business (in the form of shares or options) they are more inclined to contribute to the success of that business.

They are also more likely to be loyal, work harder, solve problems faster and support the wider team to ensure that everyone gets to share in the success.

Additionally, if your team members know that their futures will be bettered by your company’s success, you’ll be much more likely to see them shake out their networks or shout about what you can do on social media.

Ultimately, this will help you grow faster, reduce your dependence on one or two clients, and it’ll take the pressure off you too, which brings us nicely to small business challenge no.3.

3. Company owner burnout

If you got hit by a bus tomorrow, would your business simply stop?

If you find that you shoulder 99% of the responsibility and that it’s exclusively you driving things forward, use the aforementioned ‘ownership effect’ to share the load.

If people feel connected to a business’s fortunes in a visceral way, they’ll be more likely to make good decisions in the business’s favour should you need to step back for whatever reason.

So instead of choosing to watch another episode of the latest Korean drama, your team member might opt to finish that report. Or instead of browsing Reddit, they might be more inclined to get that pivotal quote out the door. 

The Ownership Effect is truly magical in terms of incentivising others to do their best by the business.

And don’t forget, you can spread the web of responsibility far and wide. You don’t have to just give equity to your employees - you can also share equity with anybody who contributes to the growth of your business.

This could include contractors, consultants, silent partners, anybody. And everybody benefits.

You’ll grow a more profitable and sustainable business, and your shareholders will all be rewarded for helping you develop to your fullest potential.

Special offer exclusively for Small Business Saturday 

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Are you a small business in the UK interested in accelerating your success with a share scheme?

Book a call with us today to discuss your options and if you quote ‘Small Business Saturday’ between now and Christmas 2021, you’ll receive a 10% discount on your first year’s subscription.

Happy Small Business Saturday!

#SmallBizSatUK

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