The big five people challenges facing Lancashire SMEs in 2025 and how to tackle them

Lancashire is full of hardworking, ambitious businesses that make the region one of the UK’s most resilient and entrepreneurial places to live and work. But if you’re an SME owner or adviser, you’ll know that growing and retaining the right people is one of the biggest hurdles facing local businesses today.

Whether you’re in manufacturing, professional services, construction or creative industries, people-related challenges can quickly limit your growth. In fact, from Preston to Pendle and Chorley to Colne, employers are sharing many of the same struggles. So, what are the big issues and how can we tackle them?

Burnley-based Cube HR's Sharlene Spence shares her top five people challenges the firm is hearing from across the region, plus practical tips to help your business turn them into opportunities.

1. Finding and keeping the right skills

Let’s start with the big one: skills shortages. Lancashire businesses are struggling to find candidates with the right blend of technical ability, soft skills, and attitude. This is especially tough in industries like manufacturing, engineering, health and digital.

What you can do:

• Work closely with local training providers: Colleges like Runshaw, Burnley College, and institutions like UCLan and Lancaster University are keen to collaborate with businesses to shape courses and offer placements.
• Apprenticeships are gold dust: They let you mould talent from the ground up and there’s often financial support available.
• Upskill your current team: Online training, government-funded bootcamps, and internal mentoring schemes can fill gaps from within.
  Boost your employer brand: A clear purpose, flexible working, and a positive culture can make all the difference in attracting and keeping great people.

2. Recruitment woes in rural or less connected areas

Lancashire isn’t just about big towns. Many of our businesses are based in beautiful rural areas or small towns where recruitment can be even more challenging. Poor transport links and smaller talent pools often mean roles are hard to fill.

What you can do:

• Offer flexible working: Even partial hybrid or remote options can attract candidates from further afield.
• Use local networks: Tap into community groups, job fairs, and word of mouth - they can sometimes beat online job boards.
• Make the commute worth it: Consider travel allowances, car sharing scheme or earlier finish times to support staff from further afield.
• Collaborate with others: Teaming up with nearby businesses to share recruitment drives or talent pipelines can save time and money.

3. Low productivity and team engagement

Lancashire’s productivity has room to improve and disengaged staff are often part of the issue. People can feel stuck in their roles, unclear about their future, or disconnected from the wider business goals.

What you can do:

• Get leadership right: Invest in developing your managers. A great manager can boost motivation, while a poor one can lose your best people.
• Talk to your team: Regular one-to-ones, anonymous feedback tools, or informal check-ins show you’re listening and care.
• Celebrate wins: It doesn’t have to cost much. A simple ‘thank you’, team lunch or shout-out can go a long way.
• Be clear about career paths: Even in small teams, showing people how they can grow or take on new challenges keeps them engaged.

4. Mental health and wellbeing pressures

We’re all more aware of mental health these days, and rightly so. But many SMEs still feel unsure about how to support their staff, especially when budgets are tight and teams are small.

What you can do:

• Start with small steps: Encourage open conversations and normalise talking about stress, burnout, and wellbeing.
• Train key staff: Mental health first aid training or awareness sessions can equip managers with the confidence to spot issues early.
• Signpost support: Local organisations like Lancashire Mind or Business Health Matters offer free or low-cost resources.
• Lead by example: If leaders’ model healthy habits, like taking breaks and respecting work-life balance, others will follow.

5. Keeping up with changing expectations

The world of work is changing fast. Younger workers in particular value flexibility, purpose, and a sense of belonging. Businesses that don’t adapt risk falling behind.

What you can do:

• Offer modern perks: Flexitime, remote work options, or even pet-friendly policies can be more attractive than cash alone.
• Be purpose driven: Show how your business is making a difference to the local economy, the environment or your community.
• Use tech wisely: Embrace simple tools to streamline admin, manage performance, or communicate better with your team.
• Stay open to change: Keep an eye on what competitors are doing and ask your team what they’d like to see.

Final thoughts

People challenges aren’t going away but they are manageable with the right mindset and support. The good news? Lancashire is full of collaboration opportunities, from local colleges and Growth Hubs to peer networks and business support schemes.

If you’re an SME owner, now’s the time to think proactively about your people strategy. And if you’re an adviser, there’s a huge opportunity to guide businesses toward solutions that make a lasting impact.

Together, we can help Lancashire’s businesses not just survive these challenges  but thrive.

Need support?

Start by checking out resources from Boost; Lancashire’s Business Growth Hub or organisations like the North & Western Lancashire Chamber of Commerce. And if you're already doing something that's working, share it! Good ideas spread fast when we're in it together.

For further information on Cube HR, visit https://cubehr.co.uk/.