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Background to the SME Survey sponsored through the Wising UP! Online Website
1.The original aim of the
Dissertation
The aim of the Dissertation was to discover the most significant advice/guidance
offered to sole traders and small businesses in the East of England area (primary
focus Cambridgeshire) who started about three years ago. The intention was:-
Background Justification
In the UK, the government funded Small Business Service (SBS) collates data on small businesses to inform and create patterns of best practice for business advice agencies. As an agency of the Department of Trade and Industry (DTI) they also manage and direct Business Link, throughout the UK. In turn, Business Link (with its business start-up assistance programmes), helps SBS manage various subsidiary projects concerned with small business support. These range from ground floor business “start-up and support” projects, such as the Local Enterprise Programmes, to helping businesses achieve the “Investors in People” standard (a UK business”Kitemark”).
The primary concern of the SBS and, pro rata, Business Link is to support and encourage the successful growth of the small business sector in the UK. However, much of the data on which their strategies and policies are based has been provided through commercial/institutional surveys using client databases and is, I believe, skewed - e.g. The 2003 Barclay’s Bank Survey was limited to information drawn from their own account customers.
Business Link and various UK Banks such as LloydsTSB, Barclays and Nat West offer advice services for new and small businesses in the UK as well as the self-employed. However, national statistics gathered from these clients is purportedly either vague, overly general, out of date or worse, skewed by the nature and methodology of the collection or by regional PEST considerations. Bank data on small businesses could, for example, be heavily influenced by a need for banks to show shareholders evidence of the ethical and/or profitable nature of their client relationships. In addition only those small businesses seeking financial advice, support, already in receipt of income or in need of an “official” status for cheque processing are likely to open bank accounts – in the UK many very small businesses start using personal accounts, so start without ever approaching a bank directly, in a business capacity. For a very small business or a sole trader this may be fuelled by a desire to avoid business bank charges or to obscure income liable for tax assessments; but it could also be through a lack of awareness that help schemes are available or through ignorance of how best to set up or improve a business’s finances so that it can meet its tax obligations. In recognition, the Inland Revenue has also set up free small business advice services, offering short courses covering tax issues, rights and allowances, but, again, they can only gather their statistics from those people who register an interest.
This is of concern to all organizations on the ground, who are trying to deliver the most appropriate service they can to the small businesses they support.
By asking businesses, that have (and have not) received support from the established advice sectors, to recall what significant advice they did receive when starting out, the emphasis is not so much on whether it was good or bad so much as how that advice and its source influenced the direction in which the recipient took the business. It will indicate what areas of advice small businesses have found most and least useful in their struggle to survive their first few years. Other questions may also reveal whether the level of help and guidance sought and received is influenced by certain personal factors in the lives of the business entrepreneurs contacted - for example age and marital status might predicate caution or otherwise (ie are young single people more or less risk averse than older people with partners, seeking more or less advice?)
In the UK there is limited published statistical information covering this subject area. The Barclays Survey 2003 and various pieces of data provided through the Small Business Service (SBS) and the Office of National Statistics (ONS) provide useful background information. Of most significance, to the region under discussion, is the “Regional Business Survivability Survey (East of England)” conducted by examining pooled statistics from the East of England Business Links collected over a twelve month period to 31 March 2002. This was a very positive report on the impact of Business Link on the businesses it advised over that period – but limited information is available on the survivability, over the same period, of those new businesses who did not utilize Business Link resources.
There are few recent independent and unbiased survey of this type – hence the interest in and support of the proposed project.
The Inter Departmental
Business Register (IDBR) is maintained by the ONS and collects data on employment
and VAT and has considerable core data. Frequently used as an address source
for business surveys, it is a very useful resource but, as the National
Statistic Website quotes:-
”It covers all parts of the economy, but misses some very small
businesses (self employed and those without employees and low turnover)
and some non-profit making organisations. There are around 4 million businesses
in the UK of which 2.1 million are on the IDBR. The IDBR provides nearly
99% coverage of economic activity. “
Many other Government
Agencies use data sourced through the IDBR as the basis for their own policy
decisions but its usefulness is limited by the absence of small business
data; particularly on those small low turnover businesses that do not sell
services that justify VAT registration. Complementary studies have been
done by various UK Business Schools – most applicable seems to be
the Warwick Business School 2004 survey entitled "Finance for Small
and Medium-Sized Enterprises" published through www.bytestart.co.uk
(a “small business portal”). Whilst the primary research was
not relevant to this project as the aim was to establish the source, breadth
and management of small business financing, part of their findings suggested
that:-
• 2,200,000 businesses have no employees (about 61% of SMEs).
• 1,450,000 businesses have an annual turnover of less than £50,000
of SMEs).
• 1,350,000 businesses have less than £10,000 worth of assets.
In essence, in 2004, 2.2 million SMEs would not have been registered as employers through Inland Revenue, 1.45 million SMEs had no legal requirement to register for VAT and 1.35 million SMEs were exempt from the need for full business disclosure for the purposes of Company taxation… potentially leaving a lot of missing (possibly even skewed) statistics from all published small business information based on “official sources”.
International Research
includes a variety of government, financial sector, commercial and educational
sources for data. The most potentially fruitful source of information seems
to be that available through commercial channels, but the amount of detail
is overwhelming and information from US companies such as the Brandow Company,
Inc, on the state of small businesses in the US, by sector (http://www.bizminer.com/why.asp),
is probably more appropriate to advise the businesses being researched rather
than the project, itself. Background information is also available through
the International Council for Small Business and Entrepreneurship (ICSB)
and its sister organisation the European Council for Small Business and
Entrepreneurship (ECSB) of which I hope to become a full member before the
completion of this project. Of further interest, for comparison, are the
national figures provided through the US Census Bureau the Australian Bureau
of Statistics and the Canadian Government as all have active government
sponsored programmes to promote the establishment of successful businesses.
If you would like to see a summary of the finished MBA dissertation based on the general data collected in 2005/6 and published during 2006 and the trends highlighted, then please click here for the 4.2Mb pdf file. The author can be contacted at with@itude.org.uk
Thank you
Gaile
If, having read about the survey, it has opened up possible sources of advice and information that you have not previously considered - you might find the following link to The UK Government's sponsored Small Business Advice Organisation - Business Link useful. As well as being a mine of impartial advice it will also have links for local contacts and to free and sponsored activities, training opportunities and Enterprise Programmes in your area - http://www.businesslink.gov.uk
With thanks to U P Publications Ltd, staff and directors for supporting me in my MBA for the last three years of silly questions and insatiable curiosity and for allowing me to suborn part of the website for my MBA dissertation research. I hope that the statistics gathered will help to improve free services and subsidised support for small and medium businesses.
To Browse my sponsor company's website Wising UP! online please click here
The online Business Magazine for small and medium Businesses