Business schools and SMEs

In assessing SMEs it is sometimes forgotten that they are not really in any sense a homogeneous group at all. In fact, with close to 6 million of them, spanning those who employ from zero to 250 employees and have turnovers that range from perhaps a few thousand pounds up to £50 million, it can be hard to draw any common conclusions at all. This can cause problems, not least in trying to direct policy to help unlock the sector’s potential.

In all cases though, one of the key influences of improved growth and productivity is the level of management leadership and skills. When setting up a small business, the challenges involved in getting a start-up launched and brought to life are quite different from those required to drive growth and further innovation and manage all the processes around scaling up. The skills found within the firm's leadership, and acquired through additional employees, are an important determinant of future success.

A study by the McKinsey Global Institute found that, in developed economies like the UK, at least 55% of the expected improvement in labour productivity growth will come from simply adopting the best management and technological practice from other firms. The remaining 45% came from actual innovation in business processes or technology.

External factors can also be important in contributing to the success of a business. Some, such as ready and easy access to finance are constraints. Others, such as successfully starting to export and accessing SME-friendly public procurement schemes, are opportunities for growth.

Some business owners are incredibly ambitious and want to spur growth as fast as possible. Their metrics of success would include revenue growth and market share. Several studies conclude that having entrepreneurs and business owners who have high-growth ambitions is more important than the immediate business environment.

Other owners might prefer to focus on more societal benefits, such as providing employment opportunities for young people or having a reputation for honesty and expertise.

Wanting to innovate and grow, however, is not the same thing as being able to. Some business owners can be incredibly protective of their company and can fail to see the need for the changes and improvements that can make significant improvements to both revenue growth and profitability.

If many business owners lack the confidence, expertise and skills to plan how to grow their business, they need an effective resource which can help them unlock their potential. Networks of other business owners can be effective; sharing best practice, learning new processes and techniques; collaborating and sharing the cost for R&D can all be an important influence. 

Business schools, as repositories of excellence and deep learning, are a very good resource for catalysing business growth and providing a variety of business support. They can do this through the application of research to real-world business problems; through teaching on a variety of courses designed to equip entrepreneurs and business people with knowledge and skills and through consultancy, where they provide expertise to solve a particular problem or series of problems, whether funded by the business or through government-funded programmes.

As part of our mission to help SMEs find new customers and suppliers and easy access to services that will help them grow and be more productive, we believe there is tremendous scope to help and encourage a further broadening and deepening of the relationship between business schools (not just the SBC award holders) and a wide range of smaller businesses.

Covid has caused a huge dislocation to many businesses and those who adapt and innovate will be best placed to succeed in the new business environment. Business schools have the ability to provide a ready source of local advice. Tapping in to this expertise and experience is a fantastic way for SMEs to move from business survival to powering ahead with growth.