Editor's round-up: A telling detail about small business growth

 

This week we published our annual Small Business Report, in which we survey the start-up and small business sector to find out what you're doing and thinking. For the 2011 report, we put the accent on support for small businesses  - a timely theme, given the upheaval in the business support market. An impressive 91 per cent of the businesses we spoke to across the regions said they planned to grow, which is brilliant. But it's how they plan to grow that is really telling - 26 per cent said they planned to grow by employing people within their business; but 49 per cent across the UK regions said they planned to grow through outsourcing aspects of their business, such as accounts, IT, marketing, and so on. Why is this telling? Because, as Emma told me after the report had been published, "Whenever the Government talks about growth, you can bet the next thing they talk about is jobs." Or, in other words, the way that policymakers think is a little way behind what's actually happening. Technology has made it much easier to set up and run a small-scale business successfully, and to grow it without outgrowing the home or taking on lots of staff. The chances are there's another small business like yours that provides exactly the service you're looking for; and in buying their services you are, in fact, providing employmen. But it's not the kind of direct, PAYE-type employment the Government likes, because it's not so easy to measure.

The trouble with too little information

In truth, the collection of information about the start-up and small business sector is generally pretty poor. Except, perhaps for the BIG figures -we know, for example, that 4.8 million UK businesses are 'small' according to the Government definition; we know that 3.6 million of these are owner-managed;  we also know that collectively, these small businesses employ 60 per cent of the UK's private sector workforce and generate very nearly 50 per cent UK GDP*. What these top level figures tell us is that, as a collective, the small business sector carries a lot of weight. But you wouldn't think so. Headline statistics aside, there's a chronic lack of good, detailed, information about small businesses. You've probably been told at some point, for example, that 75 per cent (or whatever) of businesses will fail within three years. Ever wondered where that figure comes from? So do I, and I'm a journalist. As far as I can see, there's not a shred of reliable  evidence to back it up, yet you hear it again and again. If you ask me, it's nonsense. I have lots of questions about the small business sector that I just can't answer. I don't think that's because I'm stupid or too lazy to find out. I think it's because nobody actually knows the answers. Yet we have advisors, ministers and policymakers queuing up to frame policies that may or may not work for us and may or may not represent the best investment of public money.  I'm not saying Government policies are wrong; just that they're based on piecemeal knowledge of the sector, so nobody knows if they're actually right. It's always going to be hit and miss.

Why we need more information about small businesses

In my view, our Small Business Report gives a little hint that the policymakers are lagging a little behind us and a big reminder that our influence over policy is far too small given our collective size and strength. What we need is a systematic, long-term effort to ask the right questions of small businesses and record the answers year in, year out. We need an annual Small Business Report, but on a much bigger scale.  And we need people who have influence to take proper notice of it. The small business sector is increasingly dynamic, innovative and self-sufficient. You're creating vibrant, modern business models that the rest of the UK business community would be wise to really wake up to. We matter. More than you think and more, I suspect, than anybody really knows. Isn't it about time somebody found out and used that information to create policies, support and opportunities for the right businesses at the right time, delivered in the right way? Then we can be reasonably sure that's it's going to help you. Simon * Figures from the Department for Business, via the Federation of Small Businesses Image: Charlie Ambler