Small and medium sized businesses need training and support to survive

Effective people management training for small businesses is essential in solving the UK’s ongoing productivity problem, experts have told MPs.

Small and medium-sized enterprises (SMEs) account for more than half the UK’s turnover and employment, but evidence sent to the business, energy and industrial strategy (BEIS) committee as part of its inquiry into small businesses and productivity suggested there were a number of barriers preventing them from achieving better productivity.

Many owner-managers have very limited experience around managing people and find it difficult to talk about business challenges. The inquiry found that it is important to recognise that not all SMEs are the same and they require training and support targeted to their specific needs. Evidence focused on family-owned firms, as they account for two in three small businesses in the UK, but only 30% survive beyond the first generation.

There is a need to develop support mechanisms that improve the high-level management skills of family-owned SMEs, and enhance their understanding of governance options through better training. The evidence highlighted a range of issues that hinder small businesses and damage their productivity, but two main themes emerge – the impact of late payments by major companies and the lack of effective management training.

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