Report urges start-ups to tackle poor management skills to survive past year three

Small Business Charter involved in nationwide campaign launched to curb 44% failure rate of UK start-ups and boost growth of SMEs

Start-ups in the UK must improve management skills to increase their chances of survival, according to the recommendations of an industry report published today [15 September].

New analysis of UK-wide data on SMEs* reveals that nearly half (44%) of businesses founded in the UK in 2011 had failed by 2014, with incompetence and bad management to blame for 56% of these business failures. The lack of professional management skills is also holding back UK productivity and employment growth, with only 16% of all new SMEs found to be fast-growing.

The issue of poor management is no surprise given that just two in five (42%) of small businesses were found to have provided management training in the previous 12 months, compared to 89% of businesses with 250+ staff. The position is even worse for businesses with fewer than 24 staff where only one in three (36%) receive any management training.

The Growing Your Small Business report, which provides new analysis of the Office of National Statistics’ Business Structure Database and the UKCES Employer Skills Survey, was jointly produced by the Chartered Management Institute, Chartered Association of Business Schools, The Supper Club, and with support from Small Business Charter awarded schools. Alongside the data, the report reveals a complex picture of business support practices across the UK with more than 600 initiatives available to small businesses.

The launch of the report at the House of Commons marks the start of a campaign to help SMEs access the management support provided by business schools and provide much better sign-posting to management best practice and professional support.

The report reflects the outcomes of a nationwide roadshow hosted by business schools, CMI and partners involving 1,200 managers sharing their growth stories and how business schools can play a key role in developing the management and leadership capability of owner managers, recruiting and development new managers, and supporting both their survival and growth.

A new ‘heatmap’ developed for the campaign provides employers with key information on the qualifications, networks, placements, business support and professional management qualifications being provided by local business schools.

Anne Kiem, chief executive of the Chartered Association of Business Schools, said:

“The UK’s business schools are full of world-class business expertise and knowledge, and with a business school conveniently located in every region, including those who hold the Small Business Charter, they are perfectly placed to support the growth of small businesses. As this report has evidenced, those small businesses that have received support from a business school have received high quality advice and professional development to start, grow or reshape their business.”

Ann Francke, chief executive of CMI, commented:

“Small businesses are a vital part of our economy, yet as our report shows their growth is being held back by poor management and leadership. CMI has an important part to play in changing that and improving the productivity of small business. Our online heatmap gives managers a simple tool to find the business schools and publicly-funded support programmes available to help them.

“The heatmap also shows the business schools involved in the Chartered Manager Degree Apprenticeship, which will give small businesses the chance to train graduates on a scale that hasn’t been possible before. Small employers will benefit from specific support measures, including financial subsidy, making it easier for them to develop the managers and leaders they need.”

Emma-Jane Packe, director of The Supper Club, said:

“We’ve worked with hundreds of entrepreneurs and SMEs and find that while the circumstances may differ, 95% of the challenges faced by business owners are common across all sectors. Having the skills, along with a capable team, to manage through these is imperative but sharing with a peer group can help you find solutions faster and be an invaluable resource in helping you scale your business. We say to all SME business owners, we know it can be lonely being an entrepreneur, but the support is out there to help you achieve growth.”

To use the heatmap and find out more information on the Growing Your Small Business Campaign visit www.managers.org.uk/growingSMEs and via #GrowingSMEs