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Local networks; the key to SME growth?

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How can we best support small businesses in the UK to grow and prosper?

This is a question we’ve asked again and again at the UK Commission for Employment and Skills (UKCES). It was the driving force behind our Management and Leadership in Supply Chains Productivity Challenge of the UK Futures Programme, our innovative, co-investment research initiative. We asked leading UK businesses to explore this question with us by using their influence to drive up management and leadership skills in their supply chains. And we found that the answer might be closer to home than you think.

We know that good management and leadership underpins other aspects of a firm’s success. But it can be challenging to find the time to think about better ways to manage the business when there are deadlines to meet.  Over just a few months, those businesses we worked with not only increased abilities in their supply chains, but this also encouraged small firms to reconsider their approach towards developing their managers in the future.

How did this come about?

Nigel Whitehead of BAE systems, speaking at the recent launch event for these findings, identified the crucial element as being the use of existing relationships within the supply chains to encourage participation and persuade busy managers to spend time on the business, not just in the business. As well as that, face to face contact was really important to grow relationships and trust. This personal contact also helped network members to share ideas and even develop new business contacts and opportunities.   All this is made much easier if you don’t have to travel far to take up those opportunities.

There’s a real opportunity here to drive change locally – and this idea is central to the UK Futures Programme’s latest Productivity Challenge ‘Leadership and Entrepreneurship in Small Firms’. The importance of testing local partnership approaches to demonstrate impact on engaging and upskilling small businesses was picked up on in UKCES and Centre for Cities’ City Deals and Growth report last year. We’ve asked anchor institutions - organisations at the centre of local networks (such as universities, Chambers of Commerce and enterprise networks) – to use their influence to access, engage and upskill small businesses in their areas.

These anchor institutions, and the partnerships they have established, have also been showing striking confirmation of the importance of place in encouraging small firms to make a change. The established reputation and reach of these anchors, as well as their existing work in unifying and setting common goals for their localities, have brought together businesses and encouraged them to engage in their leadership and entrepreneurship programmes. While for the businesses, having the opportunity to meet other managers like them in their area and learn from trusted organisations, without having to travel far, is encouraging them to think about managing their business in a whole different light.

Tracy Mawson, from St Helens Chamber, speaks very positively about their involvement in the UK Futures Programme. She said: “We have always been an anchor institution, playing an important role in our local community when it comes to engaging and upskilling small businesses. Our strong local presence gives us the networks, trusted reputation and influence which are vital to this engagement. It also gives us the understanding to support businesses to develop the skills that reflect local demand, helping to build a more productive and prosperous community for us all.”

The St Helens Chamber and 7 other projects are still on-going, but a key message is already appearing: trusted, local organisations can play a crucial role in supporting small firms through using their local networks. We’ve seen promising signs of not just an increase in skills but a shift in perceptions towards training and greater communications among the small businesses engaged.

So, what are the skills challenges for small businesses in your area? What kind of partners could you bring together to help tackle them? And does devolution offer greater opportunity for developing these partnerships? Whether it’s Universities, Chambers of Commerce, Colleges or Councils for example, they all potentially have something to offer – they have the trust of small businesses or expertise in supporting and developing business. Acting locally can make it easier for busy managers to take up a learning opportunity with like-minded people - opening up a host of other possibilities for them and for your local economy.  Keep an eye on our website this summer when UKCES will showcase the projects and highlight what’s worked for others to consider in their own locality. A little collective responsibility can drive lasting change for yourself, the businesses you work with, and - if we all pull together - the UK economy as a whole.

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