Support for post start-up small business growth

Abstract

The objective of this thesis is to determine how small firm support provision might be improved in order to help post start-up businesses in Devon and Cornwall to grow. Interest in this issue stems from (a) previous research carried out in the region highlighting a possible need for continued business support after the initial 12 month start-up period and (b) the increasing emphasis upon stimulating business growth apparent in recent small firm policy. An examination of relevant literature demonstrates that current understanding of the critical influences upon young post start-up business growth and the extent to which existing support adequately addresses such factors is limited. To address these gaps in existing knowledge, two questionnaire surveys are conducted. In both, emphasis is placed upon owner-manager perceptions in recognition of an identified need for support to be client-led and because of the role played by owner-manager perceptions in influencing growth motivation and actual growth. In-depth interviews are also carried out with ownermanagers and staff from start-up support providing organisations. A variety of techniques are employed to analyse questionnaire responses. Overall, results indicate that owner-managers view the critical influences upon the growth of their firms to be highly individual in nature. Other findings show employment growth and growth intentions amongst responding businesses to be limited. However, some variations are shown to exist between firms. Discriminant analysis is employed to determine the effectiveness of those company characteristics associated with variations in predicting business growth, owner-manager growth intentions and owner-manager perceptions of the importance of different factors influencing growth. Results suggest that in providing support for young post start-up firms, the targeting of businesses on the basis of easily measured characteristics is not likely to be effective. Results from the second survey show that whilst start-up support is perceived to be adequate in addressing some growth-relevant factors, for many other factors a 'negative support gap' exists. These gaps relate to areas such as strategic product-market development, access to tangible and non-tangible resources, owner-manager personal development, marketing and financial management. An analysis of owner-manager's awareness, use and perceptions of non-start-up assistance suggests that the identified gaps are not being adequately addressed by other schemes and initiatives. Interview evidence suggests that the limited scale of support available to young micro businesses is perceived to be a particular constraint upon the growth opportunities available to post start-up firms. Drawing on quantitative results and evidence from in-depth interviews, a possible framework for providing effective support for young post start-up businesses in Devon and Cornwall is developed. This proposes the use of a network based approach to both the evaluation of support needs and the provision of assistance. Recognising the varying growth needs, capabilities and ambitions of the owner-managers studied, emphasis is placed upon close cooperation between interested bodies in evaluating the prospects of firms and an individual approach to support delivery. However, it is concluded that in providing assistance for young post start-up firms, a broadly inclusive approach should be adopted. In making recommendations for further research, the limited employment growth experienced by most of the firms studied for this research is recognised as a weakness. A number of methodological improvements are suggested, particularly in relation to the measure of growth used.