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Small business leadership: FSB on small business leadership and management challenges

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The UK Futures Programme is a series of productivity challenges that target specific workforce development problems. The challenges trial innovative ideas with industry to test what works in addressing current or anticipated workforce development problems identified by UKCES research. The programme takes a learning approach and shares learning from all projects with industry and business.

 The fifth productivity challenge looks at leadership and entrepreneurship skills in small businesses, working with “anchor institutions” with a strong presence in their local community. One of these is the Leadership Forge project, led by Teeside University. This project will develop skills in small businesses by creating a community of experiential and shared learning via workshops, coaching, site visits to large employers and peer learning sessions.

Small business owners must become adept at developing a whole range of important skills. From creating and driving the business strategy, through to managing the day to day business, and bringing out the best in their staff.  As the business grows, the challenges a manager will face change, and business leaders need to be flexible and adapt if their business is to grow and succeed.

A lack of key leadership and management skills can be costly – particularly in a small business where the decisions of a single individual can have a sweeping effect on the entire firm. Evidence suggests that the UK underperforms in developing these skills and capabilities compared to other similar countries, impacting UK business growth and productivity.

Firms with better management practices tend to be more productive, grow faster, and have higher survival rates. Unfortunately, despite the ability of business leaders to shape the direction of the firm, investing in developing better management skills is often overlooked when seeking to improve productivity. With one eye on day to day survival, small firms are more likely to invest in operational forms of training, such as business services, at the expense of management skills.

The reality is that training can be costly, particularly for start-ups. These firms are less likely to see the value in management training and are more likely to use informal support such as networks and mentors. Initiatives that include business support and coaching, such as the mentoring services provided with a start-up loan, are important to get new business leaders thinking about the impact good management practices can have.

As a firm grows its management needs change and established firms will need to consider the effects of people management more than start-ups. This brings new challenges that can test even the most visionary of leaders - many will need training to help overcome these challenges. However, only a minority of business leaders invest in their personal development which goes on to impact their thinking on employee development. Here both cost and a lack of relevant training opportunities are highlighted as barriers for doing so.

There is a small group of firms which enjoy fast growth. These firms tend to be small and recognise that successfully managing the pace of change also relies on developing management capabilities. These firms are more likely to want to invest in training, particularly as they are likely to seek outside investment. Increasing the availability of high growth management training and providing access to strategic level coaching, akin to that delivered by the Business Growth Service, would be a welcome support for these firms.

Management skills and training are important at every stage of growth but small businesses are not investing enough in developing these. The UK Futures Programme, Developing leadership skills, competition is a welcome step to opening up access to management training opportunities, and supporting small business leaders in connecting with other local institutions. We hope that innovative ideas will help address the key barriers to investing in training, namely cost and relevance. The FSB is launching its own report on addressing the leadership and management needs of small firms this autumn and look forward to contributing to this very important issue.

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