The number of universities offering business degrees has risen 44 per cent in the last nine years, boosting many universities across the UK. In the same period, the business birth rates in the UK grew higher than their death rate for the first time.
Make no mistake – these two trends are not related, but they should be more closely intertwined. It could be the secret ingredient needed to raise UK productivity, which this week was shown to still trail behind our European neighbours, despite a recent surge.
The UK has been in the midst of a start-up boom since the turn of the century. Over 2 million new private sector businesses have been formed in that time, of which 99.9 per cent are small or medium-sized enterprises (SMEs). As small businesses know well, there is nothing small about the might of SMEs. Small businesses across the UK truly are the best of British – just last year SMEs contributed more than half of private sector turnover in the UK.
Recent data shows that productivity in the UK grew by 0.9pc and 0.7pc in the final two quarters of 2017, the strongest growth since 2011. However we are lagging behind our European counterparts in terms of productivity and growth.
The UK’s GDP per hour worked is around £50m less than the EU’s two major powerhouses, France and Germany., so for every £1 a British business makes, its German equivalent is making 35p more. And while the UK is ranked as the world’s third best country for start-ups, we are just 13th for scale-ups.
Why is this? The answer could be simple – business owners’ lack of stepping back to learn and evaluate.
A survey of 1,000 small and medium-sized business owners found that while more than three-quarters rated themselves as more or equally as productive as their peers, nearly a third had never looked at how they could improve their business practices.
In the UK, business knowledge is not always fairly allocated. Many MBA graduates do not go on to start their own business, while small business owners rarely have formal training in management and leadership skills.
Imagine the alchemy that could happen if these two groups worked more closely together.
Imagine if small business owners had their very own MBA whizz on speed-dial, to brainstorm their scaling problems. What if more business school students had experience as a teacher – with more opportunities to learn the reality of growth challenges from the coal face – hand in hand with business founders?
It is well-known that entrepreneurs often take the plunge equipped largely with determination, passion and ideas. But ask any entrepreneur and the list of things they ‘didn’t know’ when they started out is often very long. All manner of things are learnt on the job, from understanding regulation to learning how to trade internationally. Gaining the right support can be difficult, particularly for the 76 per cent of founders going it alone. However, these challenges are easier to address than most small business owners often realise.
The issues SMEs struggle with are rarely unique. They are studied each day in the classrooms of business schools across the country, an area the UK has an edge. The QS World University Rankings 2017 ranked four British institutions in its top 10, and 34 in the global top 300. We lead the way compared to the rest of Europe. Worldwide, only the US has more top b-schools.
One of the most powerful sources of support out there for small businesses is often its local business school, but it is sometimes the last place founders think to go to for help. There is tremendous scope for academic institutions to bridge the sale-up gap and provide a vital source of knowledge, skills and insight to help entrepreneurs maximise productivity and build sustainable businesses. By the same token, small businesses can provide invaluable learning opportunities and practical insight for business students themselves.
There are some great success stories out there already.
More than 300 SMEs have been helped to export through an online training course developed at Salford Business School. Just think how many can be helped in a similar way if they are engaged with the 37 (and growing) Small Business Charter awarded institutions across the UK and Ireland.
Cardiff Business School have also driven SME innovation, and has been awarded an Exemplar after demonstrating excellence in research, and in managing internal and external projects and funds.
Our small business economy is at a crossroads, surging ahead with enterprise after enterprise, but struggling to match the productivity levels of our European equivalents. As any good MBA grad will tell you, the answer is text book. To make the jump we need to go back to basics – get smart and swot up in partnership with some of the UK’s brightest business school minds. Just like talented entrepreneurs, neither group is in short supply in the UK.
Michelle Ovens MBE is chair of the Small Business Charter.
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